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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
 
FORM
10-K
 
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For
the fiscal year ended February 29, 2024
 
or
 
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For
the transition period from __________ to __________
 
Commission
file number: 000-55079
 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
(Exact
name of registrant as specified in its charter)
 


Nevada
 
27-2343603

(State
    or other jurisdiction of
 
(I.R.S.
    Employer

incorporation
    or organization)
 
Identification
    No.)

 


10800
    Galaxie Avenue,
Ferndale, MI
 
48220

(Address
    of principal executive offices)
 
(Zip
    Code)

 
Registrant’s
telephone number, including area code: (877) 787-6268
 
Securities
registered pursuant to Section 12(b) of the Act: None
 
Securities
registered pursuant to section 12(g) of the Act:
 


Title
    of each class
 
Name
    of each exchange on which registered

Common
    stock, $0.00001 par value
 
OTC
    PINK

 
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
☐ Yes
☒ No
 
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 
☐ Yes ☒ No
 
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
 
☒
Yes ☐ No
 
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
 
☒
Yes ☐ No
 
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
 
☒
 
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 


 
Large
    accelerated filer
☐
Accelerated
    filer
☐

 
Non-accelerated
    filer
☒
Smaller
    reporting company
☒

 
 
Emerging
    growth company
☐

 
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
☐
 

If securities are registered pursuant to Section 12(b) of the Act, indicate
by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously
issued financial statements. 
 
☐
 
Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during
the relevant recovery period pursuant to §240.10D-1(b). 
 
☐

 
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
 
☐ Yes
☒ No
 
The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of August 31, 2023 based
upon the closing price reported on such date was approximately $37,637,910. Shares of voting stock held by each officer and director
and by each person who, as of August 31, 2023, may be deemed as have beneficially owned more than 10% of the outstanding voting stock
have been excluded. This determination of affiliate status is not necessarily a conclusive determination of affiliate status for any
other purpose.
 
As
of May 22 , 2024, there were 10,318,917,383 shares of the registrant’s common stock issued and outstanding.
 
DOCUMENTS
INCORPORATED BY REFERENCE
 
None.
 

 
 

  
 

 
Table
of Contents
 


 
 
Page

PART I
 

 
 
 

Item
    1.
Business
1

 
 
 

Item
    1A.
Risk Factors
10

 
 
 

Item
    1B.
Unresolved Staff Comments
10

 
 
 

Item
    2.
Properties
10

 
 
 

Item
    3.
Legal Proceedings
10

 
 
 

Item
    4.
Mine Safety Disclosures
10

 
 
 

PART II
 

 
 
 

Item
    5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
10

 
 
 

Item
    6.
Selected Financial Data
28

 
 
 

Item
    7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
28

 
 
 

Item
    7A.
Quantitative and Qualitative Disclosures About Market Risk
36

 
 
 

Item
    8.
Financial Statements and Supplementary Data
36

 
 
 

Item
    9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
36

 
 
 

Item
    9A.
Controls and Procedures
36

 
 
 

Item
    9B.
Other Information
37

 
 
 

PART III
 

 
 
 

Item
    10.
Directors, Executive Officers and Corporate Governance
38

 
 
 

Item
    11.
Executive Compensation
40

 
 
 

Item
    12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
42

 
 
 

Item
    13.
Certain Relationships and Related Transactions, and Director Independence
43

 
 
 

Item
    14.
Principal Accounting Fees and Services
43

 
 
 

PART IV
 

 
 
 

Item
    15.
Exhibits, Financial Statement Schedules
44

 
 
 

 
Signatures
46

 

 ii
Table of Contents 

 
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
 
Certain
statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”,
“anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions
include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements
are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements
to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that
could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not
limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger,
acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry
regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately
and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements
that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of
the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements
and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended February 29, 2024. We advise
you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”),
particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material
information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events.
 

 iii
Table of Contents 

 
PART
I
 
ITEM
1. BUSINESS
 
Business
Overview
 
Robotic
Assistance Devices, LLC was incorporated in the State of Nevada on July 26, 2016, as an LLC and was founded by current President Steve
Reinharz. Mr. Reinharz, has 25+ years in various leadership/ownership roles in the security industry and was part of a successful exit
to a global multinational security company in 2004. Mr. Reinharz started his first security integration company in 1996, which he grew
to 30+ employees before closing that company in 2003. In 2017, Robotic Assistance Devices LLC converted to a C Corporation, Robotic Assistance
Devices, Inc. (“RAD”), through the issuance of 10,000 common shares to its sole shareholder.
 
Artificial
Intelligence Technology Solutions Inc. (formerly known as On the Move Systems Corp.) (“AITX” or the “Company”)
was incorporated in Florida on March 25, 2010, and reincorporated in Nevada on February 17, 2015. On August 24, 2018, On the Move Systems
Corp. changed its name to Artificial Intelligence Technology Solutions Inc. (“AITX”).
 
In
2017, AITX acquired all the ownership and equity interests in RAD (the “Acquisition”). Before the Acquisition, AITX’s
business focus had been transportation services, and AITX was exploring the on-demand logistics market by developing a network of logistics
partnerships. After the Acquisition, AITX shifted its business focus to align with RAD’s mission. Since that time, AITX has been
engaged in pursuing the delivery of artificial intelligence (AI) and robotic solutions for operational, security, and monitoring needs.
More specifically, the Company is focused on applying advanced AI-driven technologies, paired with multi-use hardware and supported by
custom software and cloud services, to intelligently automate and integrate a variety of high-frequency security, concierge, and operational
tasks.
 
Since
substantially all of AITX’s operations were disposed of with the transaction’s consummation, the Acquisition was treated
as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes. AITX recorded no goodwill
or other intangible assets as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders control the
Company after the Acquisition, even though AITX was the legal acquirer. Therefore, the assets, liabilities, and historical operations
reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
 
RAD’s
solutions are generally offered as a recurring monthly subscription, typically with a minimum 12-month subscription contract. RAD also
sells their units and the client that RAD has had longest opts to do this. RAD’s solutions are expected to earn over 75% gross
margin over the life of each deployed asset when under subscription and over 50% gross margin when sold. Specifically, RAD provides workflow
automation solutions delivered through a system of hardware, software and cloud services. All elements of hardware and software design
offered by RAD are 100% designed, developed and owned by RAD.
 
Steve
Reinharz, founder of RAD and single largest equity owner of AITX, became CEO on March 2, 2021.
 
Company
Strategies
 
We
apply our Artificial Intelligence (AI) technology to solve enterprise problems categorized as expensive, repetitive, difficult to staff,
and outside of the core competencies of our client or prospective client organizations.
 
A
short list of basic examples include:
 


 
1.
Typical
    security guard-related functions such as monitoring a parking lot during and after hours and responding appropriately. This scenario
    applies to perimeters, interior yard areas, and related similar environments.

 
 
 

 
2.
Integrated
    hardware/software with AI-driven responses, simulating and expanding on what legacy or manned solutions could perform.

 
 
 

 
3.
Automation
    of common access control functions through technology utilizing facial recognition and machine vision, leapfrogging most legacy solutions
    in use today.

 
RAD’s
first industry focus is the more than $100 billion global security services market.1 RAD’s current goal is to disrupt
and capture a significant portion of both the human security guard market (over $30 billion)2 and “physical security”
(video surveillance, access control, visitor management, etc.) market (over $20 billion) through its innovative RAD solution ecosystem.
 

 

1
https://www.statista.com/statistics/323113/distribution-of-the-security-services-market-worldwide/
2
https://www.statista.com/statistics/294206/revenue-of-security-services-in-the-us/
 

 - 1 - 
Table of Contents 

 

RAD
solutions are unique because they:
 


 
1.
Start
    with an AI-driven autonomous response utilizing cellular-optimized communications, while easily connecting to a human operator for
    a manned response, as needed.

 
 
 

 
2.
Use
    unique hardware purpose-built by RAD for delivery of these solutions. Various form factors have been customized to deliver this new
    functionality.

 
 
 

 
3.
Deliver
    services through RAD-developed software and cloud services, allowing enterprise IT groups to focus on core competencies instead of
    maintenance of complex video and security platforms.

 
AITX
core premise at inception was summarized in its paper titled ‘Autonomous Remote Services’. On May 15, 2024, AITX updated
it’s mission statement to:
 
“At
AITX, our mission is to shape the future of security and facility management through the deployment of Autonomous Intelligent Response
(AIR™) technology. We harness the transformative power of AI and advanced computing to create intelligent, responsive devices and
environments that enhance security, safety, and efficiency. “
 
On
May 22, 2024, the Company released an update to Autonomous Remote Services paper called Autonomous Intelligent Response that details
the development of relevant technology and the direction of the company. This can be downloaded here: Request AIR Manifesto - AITX
- Artificial Intelligence Technology Solutions
 
AITX
Subsidiaries
 
AITX
owns and operates three (4) wholly-owned subsidiaries.
 


 
1.
Robotic
    Assistance Devices, Inc. (RAD I) is the primary operating company of AITX. The company holds the dealer and end-user contracts,
    employs all US employees, operates the California and Michigan facilities, and is the primary industry-facing entity of AITX. RAD
    I owns all intellectual property related to RADSoC™, RAD Mobile SOC™, RADGuard™, and their core operating architecture.
    RAD I owns everything related to AITX’s line of stationary devices and their manufacturing. RAD I also implements and services
    the devices. This company’s primary website is radsecurity.com and is updated as developments occur.

 
 
 

 
2.
Robotic
    Assistance Devices Group, Inc. (RAD G) is RAD G is an AITX subsidiary, separate from RAD I and RAD M, created for the purposes
    of expected future sales through a channel that is incompatible and non-competitive with RAD I’s existing channel. RAD G is
    focused on the development of advanced software and electronics solutions and completed a ‘soft-launch’ of it’s
    ‘RADPACK’ board in December 2022. This hardware is a RAD-designed circuit board designed to power all RAD devices. The
    company will be working to sell it to other manufacturers that want to create security devices but need a hardware/software solution
    and want to leverage the investments and network that RAD Inc has built over the years. The company has started to work with a commission-only
    sales person to start to share this solution in the electric vehicle charger industry. Additional sales materials are under development
    and company is working to find it’s first adopter. It is expected that this market niche could take several years to develop
    and as such the company will be looking for clients in the security space and related markets. The Company anticipates no revenues
    from RADG this fiscal year. This company’s website is radgroup.ai and is updated as developments occur.

 
 
 

 
3.
Robotic
    Assistance Devices Mobile, Inc. (RAD M) is RAD M is an AITX subsidiary, separate from RAD I and RAD G, created for the purposes
    of future developments, partnerships, and marketing in which the company may engage in the future. RAD M is focused on the development
    of autonomous mobile security and facility management devices, both ground-based and airborne. RAD M’s first solution, the
    ROAMEO™ unmanned ground vehicle, incorporates RAD M technologies related to the development of artificial intelligence based
    autonomous driving, perception, and prediction. ROAMEO features technology from RAD I and RAD G to perform its functions. The company
    believes that it’s developing suite of mobile devices will bring the interactive outdoor, indoor, rugged, commercial security
    and facility robots to the market. These mobile solutions will complement the stationary systems. The three solutions are the RADDOG™
    lineup of quadrupeds and ROAMEO as the outdoor long-running high visibility robot. Previously mentioned RAD M project referenced
    as ‘Mobile 3’ is on indefinite hold as the stated solutions are given all the development resources. ROAMEO is manufactured,
    implemented, and maintained by RAD I.

 
 
 

 
 
Currently
the focus on the RADDOG lineup pushes the completion of ROAMEO 4.0 into later calendar year 2024. RAD M will continue developing additional
mobility solutions that RAD I will bring to market.

 
 
 

 
 
The
    Company believes strongly that the next ROAMEO will have significant positive financial impact on the Company. The Company believes
    demand for this solution is strong based on continued requests for prospects despite no marketing or promotion.

 

 - 2 - 
Table of Contents 

 


 
4.
Robotic
    Assistance Devices Residential, Inc. (RAD R) is the AITX entity developed to bring AIR™ to residential products. The first
    announced product is called RADCAM™ and is scheduled to be on the market in 2024. RAD R uses technology from RAD Inc. At this
    moment it is not known if RAD R will be built into a long term entity of AITX or if it will be sold. Other AITX are not meant to
    be sold.

 
AITX’
main website is aitx.ai. Company and investor information can be found at this site and it is updated regularly.
 
Background
- First Commercial Rugged Outdoor Security Robot
 
Mr.
Reinharz started RAD in the summer of 2016. RAD originally partnered with SMP Robotics Systems Corp. (SMP) and commercialized the SMP
S5 Robot for the security market. RAD’s commercialization of the platform focused on integrating traditional security industry
manufacturers’ solutions onto the robotics platform. After two paid proofs-of-concept for large utility companies (under NDA) and
over 18 months of development and testing, RAD began deployments with various Fortune 500 customers. These deployments were scheduled
to start in October 2017 but were delayed until December 2017 due to various supply chain challenges.
 
By
March 2018 it was apparent that S5 platform was not sustainable and RAD began to pull robots out of service.
 
The
robots were rejected by customers due to unsatisfactory reliability and some technical flaws that could not be solved, despite full efforts
by SMP and RAD. RAD now considers this phase of the Company ‘Phase 1’ into robotics. The Company attempted over 40 deployments
during this period.
 
RAD
has had no contact with SMP Robotics since April 2018.
 
Much
of RAD’s existing convertible debt was acquired in support of the RAD/SMP robotics program. This convertible debt has largely been
converted to long-term debt and warrants as shown in these financial filings.
 
ROAMEO
will deliver on AITX’s goal of bringing the first outdoor, rugged, commercial security and facility robot to market. This mobile
solution will complement the stationary systems AITX already has operating in physical security applications serving customers in a wide
range of environments.
 
Background
– RAD’s 2nd Generation Ecosystem
 
RAD’s
primary strategy has always been to use AI technology and modern systems to transform the security industry. Mobile robots, indoor and
outdoor, are a part of that strategy. However, to ultimately realize the delivery of these solutions, a set of “stationary robots”
required development.
 
These
stationary robots launched in April 2018 with the Security Control and Observation Tower (SCOT), development of which began in August
2017. SCOT performs many of the same functions as a stationary human security guard, plus many tasks that human guards cannot, and does
so at approximately 15% of the cost. There is no known comparable solution available today that blends technology, usability, unique
features, and price. SCOT received an enthusiastic response from the security market and industry accolades. SCOT’s positive reception
reinvigorated RAD, which accelerated the development of the software and cloud services that support SCOT. SCOT runs on the RAD Software
Suite™. This software suite is a cloud and mobile platform at the heart of all RAD security solutions.
 
A
beta version SCOT was first shown to potential customers at the end of February 2018 in an exposition held in Ohio that tested customer
reception and elicited voice-of-the-customer input. SCOT and the preliminary RAD Software Suite received a favorable customer response.
Customer feedback was incorporated into SCOT, and ideas on SCOT derivatives were added to the hardware development roadmap.
 
In
April 2018, at the ISC West, a large annual physical security event held in the United States, SCOT won three awards: (1) The Security
Industry Association’s (SIA) New Product Award for Law Enforcement/Guarding3, (2) A 2018 Secure Campus Award from Campus
Security and Life Safety Magazine, and (3) A ‘Govie’ award for government security solutions from Security Today Magazine.
 
RAD
has since won numerous awards for its solutions, including:
 
RAD
Light My Way™, Secure Campus 2022 Awards, in the categories of ‘Security & Personal Safety Devices’ & ‘Artificial
Intelligence’
 
 

3
SIA’s New Product Showcase recognizes innovative products, services and solutions in electronic physical security, and SCOT™’s
award comes in the Law Enforcement/Guarding Systems category. Technologies within the program are used in the protection of life and
property in residential, commercial, and institutional settings, displaying SCOT™’s importance in long-range human detection
and acting as a force multiplier for safety and defense against outside threats.
 

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AVA™
3.0 with STAN™, Security Industry Association NPS Awards, in the category of ‘Access Control Software, Hardware, Devices
and Peripherals’
 
ROSA™
with RAD Light My Way, CBRE Innovation Challenge 2021, in the category of ‘Best Workplace Experience Solution Award’
 
ROSA
180™, American Security Today 2021 ASTORS Awards, in the categories of ‘Best Robotic Perimeter Protection’ & ‘Best
Motion Detection Solution’
 
ROADMAP
& Product Development
 
RAD’s
product line has continued to develop with both new solutions being added and older solutions being phased out. Specifically:
 


 
—
SCOT
    is discontinued although 2 units continue to operate and generate revenue for the Company. Although initial interest was high and
    several initial deployments continue to operate as intended the solution did not fulfill expected sales targets and as such it was
    decided not to upgrade it to the ‘3.x’ technology. It has been removed from the price list. A permanent impairment on
    the Scot has been recorded.

 
 
 

 
—
Wally
    & Tom – Wally has been replaced with TOM (‘The Office Manager’) which has many but not all Wally features yet
    features stronger processing and related technology. Wally’s are being removed and replaced with Toms throughout last calendar
    year although some Wally’s will continue to operate for a few more years. Notably, the first Wally installation from 2020 continues
    to operate, is expected to operate for more years and is not scheduled for replacement.

 
 
 

 
—
ROSA
    is has completed it’s final version 3.1 production at the time of this filing. Generation 4 has begun production at the time
    of this filing (May 2024). and features the ‘RADPack Millie Gen 3’ control board from RAD G. This board is expected to
    significantly reduce assembly time because it requires a significantly less sophisticated wiring harness. The board also allows for
    better fleet management functionality since the board is 100% designed, programmed by RAD and important features have been included
    by design. ROSA Gen4 has 65% less production time than 3.1.

 
 
 

 
—
ROSA
    has spawned two significant iterations:

 


 
○
RIO
    version. ‘RIO’ is a ROSA Independent Observatory, or in other terms, a solar powered trailer with 1 – 2 ROSA units
    on top. The current market leader in this space is a company called LiveView, Inc. The Company estimates this market at around 6,000
    new trailer deployments per year and is looking to capture up to 10% - 20% of the market within 2 years. As of the time of this writing
    approximately 200 RIO have been deployed for a variety of clients.

 
 
 

 
○
ROSA
    P version: This version has 1 – 2 ROSA attached to a pre-existing pole and powered through that poles lighting power. However,
    since the lights are generally only powered at night ROSA P has the ability to power the ROSA(s) and a battery pack while the lighting
    circuit is receiving power. During daylight, when there is no lighting power, ROSA P provides battery power to the 1 – 2 ROSA.
    As the time of this filing several ROSA P are deployed across three different clients. At the time of this writing approximately
    20 iterations are deployed.

 


 
—
AVA
    has evolved into it’s Generation 4 series. This series features more responsive and much brighter touchscreen and a significantly
    improved 2 way audio system. AVA deployments continue to be more ‘sticky’ than any other RAD deployment because it becomes
    an essential part of regular facility activity since it allows for vehicle ingress and in some cases egress. AVA has evolved into
    Generation 4with the completion of the RADPack Millie Gen 3.

 

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RAD’s
4th Generation – AIR Powered
 
AITX’
AIR™ direction is the basis for the 4th Generation of hardware and software from the AITX subsidiaries. Specifically
this has launched RAD I’s 4th Generation ROSA™, RIO™ and AVA ™ products. As of May 2024 the 2024 production
has begun for ROSA and RIO. AVA 4th Generation solutions are expected to be in production in June or July. RAD G core product,
RADPack, features AIR support with version ‘RADPACK Millie Version C’. This version is built to carry NVIDIA Jetson processors
which is a critical component for AIR. RAD M devices, specifically RADDOG and ROAMEO, will all feature AIR solutions.
 
On
the mobility side the Company has made significant progress. Specifically:
 


 
—
ROAMEO
    – version 2 units have been deployed across a number of clients and it was found that the motors are not satisfactory for 100%
    reliable use. Notably one client has had a ROAMEO for many months, it’s solved their security issue and has achieved important
    milestones such as 16 hours of perfect autonomous patrols and months of perfect autonomous recharging. However the Company has decided
    to shut the 2.x program in favor of the 3.x program (which is now being called Generation 4 because it has AIR) for these reasons:
    1. The new motors built for 4.x will give much improved performance across the board and this is the type of performance the Company
    wants to use in a high volume product. Specifically the motors allow for minute operation as a stepper motor, allow for fast speeds,
    have an integrated safety brake and are suited for safety certifications (critical). 2. Production costs of ROAMEO 3.x are expected
    to be 50% of 2.0 which was considerably expensive and made it impossible to achieve required profit margins. 3. The sensor package
    and user payload on 3.0 is refined and focused for reliability. ROAMEO 3.x prototype 1 is 80% at the time of this filing although
    resources are primarily focused on RADDOG development. At this moment the Company has achieved sophisticated autonomous navigation
    for ROAMEO and other important technical milestones. Demand and requests for ROAMEO remain high despite not mentioning or promoting
    it. The Company continues work on it and advises that the first prototype should be complete prior to the end of the fiscal year.
    A permanent impairment on the version 2 units has been recorded.

 
 
 

 
—
RADDOG
    2LE – This version launched June 6, 2023, and it’s ‘LE’ denotes that it is specifically designed for law
    enforcement applications. Additional information can be found at raddog.ai. The company has deployed 1 unit to a Michigan police
    force. Currently the company is developing it’s next version of the RADDOG with it’s manufacturing partner, Unitree.
    The Company expects to reveal this version around September 2024 and has committed to produce 100 versions.

 

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Software
Solutions
 
RAD
has created a variety of front-end and back-end software solutions to power its ecosystem. RADGUARD is customer-facing software (on the
touchscreens of RAD’s field devices), and management solutions include RADSOC (Security Operations Center) and RADPMC (Property
Management Center).
 
RAD
has developed a variety of utilities that allow automatic over-the-air updates, most of which are within a back-end application called
SCOT Manager and RUPERT (‘RAD Utility, Performance, and Efficiency Reporting Tool’).
 
RAD
has developed Visitor Management, Access Control, and other applications itself instead of seeking to partner with legacy manufacturers.
It is RAD’s opinion that the legacy paradigm in the physical space underserves the markets in terms of cost, functionality, and
integration.
 
RAD
recently introduced its own Video Management System into RADSOC, delivering a fully integrated solution that facilitates robust security
and property management capabilities.
 
Towards
the end of the prior fiscal year the company announced ‘ROSS’ which is the company’s video management system. This
allows non-RAD cameras to be managed by RADSOC alongside RAD stationary and mobile devices. It further allows for RADSOC’s analytics
and communication features to be accessible and applied to these non-RAD cameras.
 
RAD
launched it’s Fire Arm Detection (‘FAD’) analytic last fiscal year and closed it’s first ROSS/FAD/ROSA project
with Rosenbaum Yeshiva in New Jersey. The company has built a modest sales funnel for similar opportunities.
 
The
company believes that RAD’s ability to deliver easy-to-use, easy-to-obtain, and easy-to-support software, combined with custom
workflow-automation applications, is key to the company’s success.
 
The
Company believes that the R&D work it has completed makes AITX’ vision for a single all encompassing security and property
technology platform complete. With the addition of the stationary and mobile solutions, plus the ability to integrate existing cameras
into the system, RAD can now provide solutions in almost every situation at a cost less than most others. RAD continues to develop and
evolve software based on AIR, client requests, new features, scaling and other reasons.
 
Manufacturing
& Assembly
 
RAD
uses various domestic and overseas machine shops for raw material procurement and machining of the required plastic and metal pieces
that build RAD devices. RAD’s sourcing has redundancy through use of multiple machine shops producing the same products for RAD.
In addition, all pieces within any RAD device can be procured from a choice of suppliers.
 
RAD’s
margins are based on current small batch production and assembly. The Company expects that economies of scale will drive greater gross
margin as quantities and efficiencies increase.
 
Team
and Culture
 
AITX
has built a strong start-up culture based on performance, sacrifice, and rewards. Attracting employees who can thrive in this environment
requires a different approach to corporate growth and development. RAD’s governing philosophy centers around the principles of
“Emotional Intelligence. Self-awareness, composure, internal motivation, empathy, and social skills are prerequisites for joining
the RAD team, and each candidate interview begins with a review of the foundational elements that comprise RAD culture.
 
Team
members are open to multitasking and wearing multiple hats, as situations demand. This allows management to focus on larger goals and
long-term strategies. We try to ensure that our entire staff shares the same core beliefs and values as the Company, allowing us to adapt
and adjust quickly to changes that might grind other companies to a halt. Members have been no stranger to the difficulties that face
a startup, including unexpected setbacks, delays in funding, or a cash crunch, but they have persevered with dedication and enthusiasm
for our greater mission. They have met incredibly tight deadlines, volunteered to make financial sacrifices, and assisted wherever and
however they can.
 
We
believe that RAD’s high-EQ work culture creates productive, motivated employees that has allowed the Company to weather the difficult
period of robot deployments and our transition to 4th generation solutions.
 

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As
of May 7 ,2024, the company has 97 full-time equivalent employees with 51 being outside the United States
 
The
Company is focused on sequential product development while sales grow in order to get close to positive cash flow. The Company has shared
publicly that it expects to be operationally positive cash flow on a monthly basis towards the end of the 2025 fiscal year.
 
Market
Environment
 
RAD
believes that its experience has shown that the security market is ripe for disruption. It has captured the interest of many Fortune
500 companies. The Company believes that no other company operating in the physical security space has the solutions, distribution channel,
reputation, sales or support model to rival RAD in the near term. In addition, the Company expects that the launch of RAD’s mobile
solutions will significantly increase the gap between it and would-be competitors. RAD will be a one-stop-shop for proven and comprehensive
mobile and stationary workflow improvement devices and systems.
 
RAD’s
technology model includes a “new paradigm” for the security industry: Security in a Box. Every RAD solution features connection
to the RAD Software Suite, a platform for AI processing, usage analytics, cloud-sided video, communications interface, audit logs, and
much more.
 
Customer
Acceptance of RAD Solutions
 
RAD
end-users include one Fortune Top 10 company and a number of other Fortune 500 companies. RAD is currently deployed in logistics, commercial
real estate, healthcare, amusement, manufacturing and retail industries. The Company believes that if RAD is ultimately deployed to only
5% of the facilities within any of these industries, the Company will be profitable.
 
RAD
Industry Leadership Role
 
Mr.
Reinharz has earned a prominent role as a spokesperson for AI and change in the security industry. He has lectured and participated in
several panels for some of the security industry’s largest events and organizations. Mr. Reinharz chairs Security Industry Association’s
Autonomous Working Group committee, which is dedicated to helping shape the industry and support progressive legislation. Most recently,
Mr. Reinharz provided a lecture to NYC’s ASIS CPP group that qualified as a continuing education credit.
 
In
March 2023 Steve Reinharz was elected to a Board seat for Security Industry Association, Inc (SIA). SIA is the foremost security group
steering policy, lobbying various governments and promoting education within the security industry.
 
It
is expected that Mr. Reinharz will continue his promotion of the new paradigm for the next few years until adoption is widespread.
 
Go
To Market Strategy
 
RAD’s
strategy has been to focus on the creation and support of a strong dealer channel. RAD has successfully executed this strategy and has
added over 60 qualified dealers to our dealer channel. The expectations were that this approach affords multiple benefits to RAD with
few downsides and almost all dealers exclusively represent RAD solutions in the area of ai-enabled autonomous devices.
 
However,
over the past year it’s become clear that the dealer channel has exceptional benefits with a limited number of dealers. Forward-thinking
dealers that invest the time and energy into RAD have the ability to be successful. Unfortunately many dealers are happy to sign up and
continue their normal business operations without giving proper efforts to promote RAD solutions to their client bases. As such the company
has about 20 active dealers with the rest being more opportunistic. As such the Company has been increasingly focusing on a limited number
of dealers, including a strong and growing relationship with the world’s largest security company, Allied Universal Inc. (AUS).
AUS and RAD are working on a large roll out to all integration offices as this report is filed. Furthermore the Company is devoting more
time to direct sales, an area of effort that gives the Company more control over the sales process. It is expected that going forward
the relationship with active dealers will strengthen while continuing to strengthen direct sales.
 
Competition
 
We
may be subject to competition by competitors that have greater operating histories, cash and operational resources than we do.
 

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Employees
 
As
of March 7, 2024, we have a headcount of 97 fully dedicated full-time equivalents, including 46 RAD Inc. employees, 28 overseas contractors,
and 23 employees of a Canadian research and development company. None of our employees are represented by a union.
We
consider our employee relations to be excellent. AITX’ principle shareholder owns a minority interest in the Canadian research
and develop company but has not received any compensation of any kind from that company to date.
 
Accomplishments
& Highlights
 
AITX,
and its subsidiaries RAD I, RAD M, RAD G, and RAD R list of accomplishments highlights successes in adding to the strength of its executive
leadership team, expanding its sales and distribution channels, launching new products, while growing its presence, visibility and profile
within its existing marketplaces. Milestones and accomplishments over the past 12 months include:
 
Cyber
and data protection and compliance
 
The
Company continues it’s focus on delivery of safe and secure software and systems to its clients. As such, last year the Company
achieved SOC 2 Report status. The SOC 2 Report has become a benchmark standard, and now an often-specified requirement, in the software
procurement process. Established by the American Institute of Certified Public Accountants (AICPA), criteria and reporting principles
are outlined as a means for organizations to create a documented framework of policies and procedures to prove how they manage and secure
data in the cloud and ensure protection of customer privacy and ensure internal communications are suitably handled. This achievement
reflects the Company’s stated goals of best-in-class data protection and internal processes.
 
The
Company has subsequently maintained SOC 2 Type 2 status and has achieved a cyber certification from a Fortune Five company which was
more difficult to obtain than either SOC certifications. Due to non-disclosure agreements with the Fortune Five company AITX can not
disclose who it is from.
 
Implementation
of ERP (enterprise resource planning) System - Update
 
The
Company’s implementation of NetSuite ERP continued through the year with a successful transition to all accounting and human resources
now fully functionality. Sales is using some of the CRM features of the ERP but still using a non-ERP platform for management of the
sales funnel. Production’s use of the ERP significantly increased over the course of the year. There remain some challenges for
full production implementation related to change management. Management expects full implementation of the ERP to complete this fiscal
year. The will allow realization of efficiencies in purchasing, kitting and production.
 
Authorized
Dealers Added to Dealer Network
 
At
the end of FY 2023 RAD has more than 57 authorized dealers, up from 32 at the beginning of the fiscal year. These dealers are located
across the United States, Canada, and the EU, with plans for continued expansion. Dealers include the largest security companies in the
world, including Allied Universal and GardaWorld, which are respectively the largest and 3rd largest guarding companies in
the world. The ongoing addition of authorized dealers introduces and delivers RAD products to new markets.
 
Discussion
on Sales
 
The
sales funnel continues to grow in both quantity and quality. The sales team has matured and stabilized with a Senior Vice President of
Sales with four full time direct sales reports. Additional sales drivers are RAD’s President as well as AITX’ CEO. Furthermore
operations team members are instrumental in encouraging clients to expand existing systems.
 
In
the fiscal year ended February 28, 2024 RAD added hundreds sales opportunities to the sales funnel. Furthermore several end users expanded
their RAD systems with commitments to continue expansion. RAD’s dealer network also grew although the Company will note that dealer
performance has fallen short of expectations and is being addressed. An opportunity is mostly defined as an account that is exhibiting
a pain that can be solved by RAD, has a budget, and has reached the point in the sales process where they have a quote they can sign.
 

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Management
has identified that conversion of accounts from opportunities to clients is improving and has identified some of the reasons for the
low conversion rate as well as new tactics to break through these obstacles. Advanced new technology sales often involve multiple decision-makers
and require a skilled and passionate internal champion. The security industry breeds risk-averse personnel. The Company is pressing several
initiatives to change the industry to create an environment where trying new things in the norm as opposed to the exception. An example
of these efforts are the Security Industry Association’s (SIA) upcoming Town Hall where three Fortune 500 security practitioners
that have implemented new technologies will share their tips for successful internal selling. AITX will be putting more emphasis on these
efforts this year.
 
Between
a maturing hardware and software line up, an increasing number of deployments/case studies/success stories, management is excited for
the next year’s sales. Management feels that ironing out technical and production challenges are well in hand and clearing the
way for a greater volume of deployments.
 
Press
Announcements
 
During
the fiscal year, the Company issued over 100 press releases, the vast majority of them being sales announcements and new authorized dealers
being signed. Public events, conferences, awards and new product announcements were also publicized via press releases. All Company press
releases can be found here: AITX News - AITX - Artificial Intelligence Technology Solutions
 
Trade
Shows and Conferences
 
As
in previous years, RAD attended several large security industry events including ISC West, GSX, plus dozens of regional conferences with
the purpose of presenting the Company’s solutions to a buying audience and continually loading the sales pipeline with new opportunities.
RAD often utilizes the events for speaking engagements or panel discussions to propel the Company’s ‘thought leadership’
regarding its AI-powered security and safety solutions.
 
Additional
Points of Interest
 
This
fiscal year was significant for stabilization of technology, better understanding of the sales process and related challenges, positioning
as a true leader in the industry and the achievement of several high profile deployments. The Company continues its focus on sales, efficiencies
with the goal of achieving positive cash flow within 18 months.
 
Management,
based on regular conversations with the Company’s largest debt holder, expects no issues regarding pushing out debt deadlines as
it has done so in years past. Management confirms the support of this lender and notes the most recent non-convertible $ 4m loan facility.
 
Management
reiterates that the plan continues to be to grow revenues, achieve positive cash flow, reduce debt and prepare for an uplist to Nasdaq.
Management estimates that with continued reasonable performance the company could obtain and maintain profitability while working to
pay down in preparation for Nasdaq uplist targeted for 2026.
 
Legal
Proceedings
 
See
Item 3 - Legal Proceedings.
 

 - 9 - 
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ITEM
1A. RISK FACTORS
 
Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as it is a
“smaller reporting company,” as defined by Rule 229.10(f)(1).
 
ITEM
1B. UNRESOLVED STAFF COMMENTS
 
Not
applicable.
 
ITEM
2. PROPERTIES
 
On
March 10, 2021 the Company entered into a ten-year lease of a 29,316 square foot building located at 10800 Galaxie Avenue, Ferndale,
Michigan 48220. The lease began on May 1, 2021. These premises are being used for offices, manufacturing and distribution. The annual
rental cost for this facility is approximately $190,000, plus a proportionate share of operating expenses of approximately $28,000 annually.
 
ITEM
3. LEGAL PROCEEDINGS
 
From
time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation
is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
There are no legal proceedings pending at this time.
 
ITEM
4. MINE SAFETY DISCLOSURES
 
Not
applicable.
 
PART
II
 
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
 
Market
Information
 
AITX’s
common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “AITX”
in June 2011 and as AITX on August 24, 2018. The following table sets forth, for the period indicated, the prices of the common stock
in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. On August 24, 2018, the Company undertook a 100:1
reverse stock split and on March 27, 2020 a 10,000:1 reverse split. The share capital has been retrospectively adjusted accordingly to
reflect this reverse stock split, except for the conversion price of certain convertible notes as the conversion price is not subject
to adjustment from forward and reverse stock splits.
 
These
quotations represent inter-dealer quotations, without adjustment for retail markup, markdown, or commission and may not represent actual
transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic
and highly volatile, which may affect the prices listed below.
 

 - 10 - 
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High  
Low 

Fiscal Year Ended February 29, 2024: 
    
   

Quarter ended February 29, 2024 
$0.02  
$0.01 

Quarter ended November 30, 2023 
$0.02  
$0.01 

Quarter ended August 31, 2023 
$0.02  
$0.01 

Quarter ended May 31, 2023 
$0.01  
$0.01 

  
    
   

Fiscal Year Ended February 28, 2023: 
    
   

Quarter ended February 28, 2023 
$0.01  
$0.00 

Quarter ended November 30, 2023 
$0.01  
$0.00 

Quarter ended August 31, 2023 
$0.02  
$0.01 

Quarter ended May 31, 2023 
$0.01  
$0.01 

 
On
May 22, 2024, the closing price per share of the Company’s common stock as quoted on the OTC was $0.0074.
 
Dividends
 
To
date, we have not paid dividends on shares of the Company’s common stock and we do not expect to declare or pay dividends on shares
of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, AITX’s
financial condition, and other factors deemed relevant by its Board of Directors.
 
Holders
of Common Stock
 
As
of May 22, 2024, there were 100 holders of AITX’s common stock of which 33 were active. The number of foregoing holders does not
include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other fiduciaries.
 
Common
Stock
 
The
Company is authorized to issue 15,000,000,000 shares of common stock, with a par value of $0.00001. The closing price of its common stock
on May 22, 2024, as quoted by OTC Markets Group, Inc., was $0.0074. There were 10,318,917,383 shares of common stock issued and outstanding
as of May 22, 2024. All shares of common stock have one vote per share on all matters including election of directors, without provision
for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding
is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share
equally in any balance of its assets available for distribution to them after satisfaction of creditors and preferred shareholders, if
any. The holders of the Company’s common are entitled to equal dividends and distributions per share with respect to the common
stock when, as and if, declared by the Board of Directors from funds legally available.
 
Our
Articles of Incorporation, Bylaws, and the applicable statutes of the state of Nevada contain a more complete description of the rights
and liabilities of holders of our securities.
 
During
the years ended February 29, 2024 and February 28, 2023, there was no modification of any instruments defining the rights of holders
of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as
a result of the issuance of any other class of securities or the modification thereof.
 
Non-cumulative
voting
 
Holders
of shares of the Company’s common stock do not have cumulative voting rights, which means that the holders of more than 50% of
the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in
that event, the holders of the remaining shares will not be able to elect any of our directors.
 
Securities
Authorized for Issuance under Equity Compensation Plans
 
On
April 14, 2021 the Company adopted an Incentive Stock Option Plan where full details are disclosed in Exhibit 10.1 of the Company’s
8K filing of April 20,2021. Under the plan the Company may grant options to service providers and employees to acquire up to 5,000,000
shares of the Company’s common stock. The options will be under the varying terms and conditions of an agreement but the exercise
price cannot be lower than 100% to 110% of the fair value of the stock at date of grant and the term of the grant can be no longer than
5 years. On August 11, 2022 the Company amended the 2021 Plan increasing the maximum number of shares applicable to the 2021 Plan from
5,000,000 to 100,000,000.
 

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On
September 1, 2022, the Company as part of the afore-mentioned Incentive Stock Option Plan issued 100,000,000 shares to 64 employees.
The shares were issued with an exercise price of $0.02, vest after 4 years with a 5 year term having a fair value of $1,020,000. For
the year ended February 28, 2023 the Company recorded $122,050 in stock-based compensation. At February 28, 2023 there remains 95,725,000
options outstanding. . For the year ended February 29, 2024 the Company recorded $198,357 in stock-based compensation. At February 28,
2023 there remains 95,725,000 options outstanding.
 
On
September 1, 2023, the Company as an addition to the afore-mentioned Incentive Stock Option Plan issued 114,217,035 shares to 48 employees.
The shares were issued with an exercise price of $0.02, vest after 4 years with a 5 year term having a fair value of $593,929. For the
year ended February 29, 2024 the Company recorded $74,241 in stock-based compensation.
 
The
following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the
weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance at February
29, 2024.
 


Plan Category 
Number of Securities to be issued upon exercise of outstanding options, warrants and rights  
Weighted average exercise price of outstanding options, warrants and rights  
Number of securities remaining available for future issuance 

Equity compensation plans approved by security holders. 
 188,667.035  
$0.02  
 — 

  
    
    
   

Equity compensation plans not approved by security holders. 
 —  
 —  
 — 

  
    
    
   

Total 
 188,667,035  
$0.02  
 — 

 
Preferred
Stock
 
The
Company is authorized to issue up to 20,000,000 shares of $0.001 par value preferred stock. The board of directors is authorized to designate
any series of preferred stock up to the total authorized number of shares.
 
Series
B Convertible, Redeemable Preferred Stock
 
The
board of directors has designated 5,000 shares of Series B Convertible, Redeemable Preferred Stock with a par value of $0.001 per share.
As of the date of this report, there are no shares of Series B Preferred Stock outstanding. The Series B Convertible Preferred Stock
are redeemable at $1,200 per share, rank in priority to common stock and common stock equivalents upon liquidation of the Company, have
voting rights on a converted basis and receives quarterly dividends of 8%. Each holder may, at any time and from time to time convert
all, but not less than all, of their shares of Series B Convertible, Redeemable Preferred Stock into a number of fully paid and nonassessable
shares of common stock determined by dividing the redemption value by the Conversion Price. The Conversion price is equal to the lower
of (1) a fixed price equaling the closing bid price of the Common Stock on the trading day immediately preceding the date of the acquisition
of the shares and (2) the lowest traded price of the Common Stock during the ten (10) calendar days immediately preceding, but not including,
the Conversion Date. Following an event of default,” as defined in the Purchase Agreement, the Conversion price shall equal the
lower of: (a) the then applicable Conversion Price; or (b) a price per share equaling eighty five percent (85%) of the lowest traded
price for the Company’s common stock during the fifteen (15) Trading Days immediately preceding, but not including, the Conversion
Date. Each share of Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends of eight percent
(8%) per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Preferred Share
has been converted or redeemed. Dividends may be paid in cash or in shares of Preferred Stock at the discretion of the Company. Any dividends
that are not paid a shall continue to accrue and shall entail a late fee, which must be paid in cash, at the rate of 14% per annum or
the lesser rate permitted by applicable law which shall accrue and compound daily from the dividend payment date through and including
the date of actual payment in full. On the thirtieth day following the issue date of this Preferred Stock the Company shall have the
obligation to redeem one-third of the Preferred Stock outstanding for a redemption price equal to the redemption value of each such share
of Preferred Stock, plus any accrued but unpaid dividends, plus all other amounts due to the Holder including, but not limited to Late
Fees, liquidated damages and the legal fees and expenses of the Holder’s counsel. On the sixtieth (60th) calendar day
following the date Preferred Stock is issued, the Corporation shall have the obligation to redeem one-half of the Preferred Stock then
outstanding for the redemption price. On the ninetieth (90th) calendar day following the date Preferred Stock is issued, the
Corporation shall have the obligation to redeem all of the Preferred Stock then outstanding for the redemption price. From the date of
issuance until the date no shares of Series B Preferred Stock are issued and outstanding, unless Holders of at least 75% in Stated Value
of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and shall
not permit any of the Subsidiaries to, directly or indirectly:
 

 - 12 - 
Table of Contents 

 
(a)
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits therefrom; (b) other than Permitted Liens, enter into, create, incur, assume or suffer
to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom; (c) amend its charter documents, including, without limitation, its articles of incorporation and
bylaws, in any manner that materially and adversely affects any rights of the Holder; (d) repay, repurchase or offer to repay, repurchase
or otherwise acquire of any shares of its Common Stock, Common Stock Equivalents or Junior Securities, other than as to the Conversion
Shares as permitted or required under the Transaction Documents: (e) pay cash dividends or distributions on Junior Securities of the
Corporation; f) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public
filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the
disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or(g) enter into any agreement
with respect to any of the foregoing.
 
Series
E Preferred Stock
 
The
Board of Directors has designated 4,350,000 shares of Series E Preferred Stock. As of the date of this report, there are 3,350,000 shares
of Series E Preferred Stock outstanding. The Series E Preferred Stock ranks subordinate to the Company’s common stock as to distributions
of assets upon liquidation, dissolution or winding up of the Corporation. The Series E preferred stock is non-redeemable, does not have
rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E Preferred Stock have the right
to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of
equity instruments with voting rights. As a result, the holders of Series E Preferred Stock have 2/3rds of the voting power of all shareholders
at any time corporate action requires a vote of shareholders.
 
Series
F Convertible Preferred Stock
 
The
Board of Directors has designated 4,350 shares of Series F Convertible Preferred Stock with a par value of $1.00 per share. As of the
date of this report, there are 2,533 shares of Series F Convertible Preferred Stock outstanding. The Series F Convertible Preferred Stock
is non-redeemable, does not have rights upon liquidation of the Company, does not have voting rights and does not receive dividends.
Each holder may, at any time and from time to time convert all, but not less than all, of their shares of Series F Convertible Preferred
Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding
shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis. So long as any shares
of Series F Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval of the majority
of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely
the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing
not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F Convertible
Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof).
 
Series
G Redeemable Preferred Stock
 
The
board of directors has designated 100,000 shares of Series G Preferred Stock. As of the date of this report, there are no shares of Series
G Preferred Stock outstanding. The Series G preferred stock does not have voting rights, rank prior to all of the Corporation’s
common stock and subordinate and junior to all shares of Series F Preferred Stock and pari passu with any of the Corporation’s
preferred stock hereafter issued as to distributions of assets upon dissolution or winding up of the Corporation, whether voluntary or
involuntary, and does not receive dividends. At any time, the Corporation may, at its option, redeem for cash out of funds legally available
therefor, any or all of the outstanding Preferred Stock (“Optional Redemption”) at $1,000 per share.
 

 - 13 - 
Table of Contents 

 
Recent
Sales of Unregistered Securities
 
The
following is a summary of transactions by AITX involving sales of its securities that were not registered under the Securities Act.
 


Date 
Transaction (*) 
Principal Converted  
Interest Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

Number of shares outstanding February 28, 2017 
  
    
    
    
    
 18 

March 7, 2017 
conversion 
$1,840  
$—  
$—  
$1,840  
 1 

March 22, 2017 
conversion 
 1,971  
 —  
 —  
 1,971  
 1 

March 27, 2017 
cancelation*** 
 —  
 —  
 —  
 —  
 (1)

April 3, 2017 
conversion 
 1,487  
 3,397  
 —  
 4,884  
 1 

April 7, 2017 
conversion 
 1,000  
 —  
 —  
 1,000  
 1 

April 20, 2017 
conversion 
 920  
 —  
 —  
 920  
 1 

April 24, 2017 
conversion 
 6,876  
 —  
 —  
 6,876  
 1 

April 26, 2017 
conversion 
 1,130  
 —  
 —  
 1,130  
 1 

May 2, 2017 
conversion 
 1,130  
 —  
 —  
 1,130  
 1 

May 4, 2017 
conversion 
 1,240  
 —  
 —  
 1,240  
 1 

May 4, 2017 
conversion 
 8,854  
 —  
 —  
 8,854  
 1 

May 8, 2017 
conversion 
 9,296  
 —  
 —  
 9,296  
 1 

May 12, 2017 
conversion 
 1,432  
 —  
 —  
 1,432  
 1 

May 15, 2017 
conversion 
 11,661  
 —  
 —  
 11,661  
 1 

May 15, 2017 
conversion 
 1,550  
 —  
 —  
 1,550  
 2 

May 18, 2017 
conversion 
 13,629  
 —  
 —  
 13,629  
 2 

May 23, 2017 
conversion 
 9,684  
 3,059  
 —  
 12,743  
 1 

May 24, 2017 
conversion 
 1,730  
 —  
 —  
 1,730  
 2 

May 30, 2017 
conversion 
 1,890  
 —  
 —  
 1,890  
 2 

June 7, 2017 
conversion 
 1,985  
 —  
 —  
 1,985  
 2 

June 9, 2017 
conversion 
 2,085  
 —  
 —  
 2,085  
 2 

June 12, 2017 
conversion 
 2,185  
 —  
 —  
 2,185  
 2 

June 14, 2017 
conversion 
 2,295  
 —  
 —  
 2,295  
 2 

June 19, 2017 
conversion 
 2,400  
 —  
 —  
 2,400  
 2 

June 20, 2017 
conversion 
 2,500  
 —  
 —  
 2,500  
 3 

June 20, 2017 
conversion 
 3,000  
 358  
 —  
 3,358  
 — 

June 22, 2017 
warrant exercise**** 
 —  
 —  
 —  
 —  
 3 

June 28, 2017 
conversion 
 2,800  
 —  
 —  
 2,800  
 3 

June 28, 2017 
warrant exercise**** 
 —  
 —  
 —  
 —  
 3 

July 5, 2017 
conversion 
 3,050  
 —  
 —  
 3,050  
 3 

July 6, 2017 
warrant exercise**** 
 —  
 —  
 —  
 —  
 3 

July 7, 2017 
warrant exercise**** 
 —  
 —  
 —  
 —  
 — 

July 7, 2017 
conversion 
 3,400  
 —  
 —  
 3,400  
 3 

July 26, 2017 
conversion 
 3,500  
 —  
 —  
 3,500  
 4 

July 28, 2017 
conversion 
 9,750  
 —  
 —  
 9,750  
 1 

July 28, 2017 
conversion 
 4,000  
 —  
 —  
 4,000  
 4 

August 2, 2017 
conversion 
 75,000  
 —  
 —  
 75,000  
 4 

August 2, 2017 
conversion 
 75,000  
 2,483  
 —  
 77,483  
 4 

August 4, 2017 
conversion 
 11,184  
 —  
 —  
 11,184  
 — 

August 14, 2017 
conversion 
 4,500  
 —  
 —  
 4,500  
 5 

August 21, 2017 
conversion 
 4,700  
 —  
 —  
 4,700  
 5 

August 29, 2017 
conversion 
 4,900  
 —  
 —  
 4,900  
 5 

September 5, 2017 
conversion 
 26,250  
 —  
 —  
 26,250  
 5 

September 18, 2017 
conversion 
 27,250  
 —  
 —  
 27,250  
 5 

September 27, 2017 
conversion 
 29,000  
 —  
 —  
 29,000  
 6 

October 16, 2017 
conversion 
 30,500  
 —  
 —  
 30,500  
 6 

October 16, 2017 
conversion 
 10,000  
 —  
 —  
 10,000  
 — 

Number of shares outstanding February 28, 2018 
  
    
    
    
    
 124 

 

 - 14 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

April 16, 2018 
conversion 
 132,160  
 —  
 —  
 132,160  
 6 

April 26, 2018 
conversion 
 14,500  
 —  
 500  
 15,000  
 1 

May 1, 2018 
conversion 
 26,250  
 —  
 —  
 26,250  
 3 

May 3, 2018 
conversion 
 5,000  
 —  
 —  
 5,000  
 — 

May 7, 2018 
conversion 
 27,900  
 —  
 —  
 27,900  
 3 

May 10, 2018 
conversion 
 32,400  
 —  
 —  
 32,400  
 4 

May 11, 2018 
conversion 
 14,500  
 —  
 500  
 15,000  
 2 

May 15, 2018 
conversion 
 7,060  
 —  
 500  
 7,560  
 2 

May 15, 2018 
conversion 
 8,000  
 —  
 —  
 8,000  
 1 

May 21, 2018 
conversion 
 20,250  
 —  
 —  
 20,250  
 3 

May 22, 2018 
conversion 
 6,075  
 —  
 —  
 6,075  
 1 

May 24, 2018 
conversion 
 13,056  
 3,300  
 —  
 16,356  
 2 

May 30, 2018 
conversion 
 8,182  
 —  
 —  
 8,182  
 2 

May 30, 2018 
conversion 
 15,000  
 —  
 —  
 15,000  
 3 

June 7, 2018 
conversion 
 2,922  
 —  
 —  
 2,922  
 1 

June 18, 2018 
conversion 
 17,000  
 —  
 —  
 17,000  
 4 

June 19, 2018 
conversion 
 14,500  
 —  
 500  
 15,000  
 3 

June 28, 2018 
conversion 
 18,000  
 —  
 —  
 18,000  
 4 

June 28, 2018 
cancellation 
 (7,060) 
 —  
 (500) 
 (7,560) 
 (2)

July 5, 2018 
conversion 
 14,500  
 —  
 500  
 15,000  
 4 

July 5, 2018 
conversion 
 8,818  
 —  
 —  
 8,818  
 3 

July 11, 2018 
conversion 
 10,200  
 —  
 —  
 10,200  
 4 

July 11, 2018 
conversion 
 14,500  
 —  
 500  
 15,000  
 5 

July 19, 2018 
conversion 
 16,000  
 —  
 500  
 16,500  
 5 

July 19, 2018 
conversion 
 11,000  
 1,366  
 —  
 12,366  
 4 

July 23, 2018 
conversion 
 14,500  
 —  
 500  
 15,000  
 7 

July 25, 2018 
conversion 
 5,000  
 —  
 —  
 5,000  
 2 

July 31, 2018 
conversion 
 11,000  
 1,455  
 —  
 12,455  
 6 

August 24, 2018 
conversion 
 —  
 15,300  
 —  
 15,300  
 10 

August 27, 2018 
conversion 
 5,500  
 —  
 500  
 6,000  
 10 

August 29, 2018 
conversion 
 4,280  
 —  
 500  
 4,780  
 11 

August 30, 2018 
conversion 
 6,000  
 —  
 —  
 6,000  
 10 

August 30, 2018 
rounding shares 
 —  
 —  
 —  
 —  
 — 

August 31, 2018 
conversion 
 20,000  
 —  
 —  
 20,000  
 11 

August 31, 2018 
conversion 
 7,500  
 —  
 500  
 8,000  
 11 

September 5, 2018 
conversion 
 8,800  
 1,375  
 —  
 10,175  
 13 

September 5, 2018 
conversion 
 7,800  
 —  
 —  
 7,800  
 13 

September 7, 2018 
conversion 
 7,000  
 —  
 500  
 7,500  
 13 

September 12, 2018 
conversion 
 5,355  
 —  
 —  
 5,355  
 15 

September 12, 2018 
conversion 
 6,500  
 —  
 500  
 7,000  
 14 

September 13, 2018 
conversion 
 5,395  
 —  
 —  
 5,395  
 13 

September 13, 2018 
conversion 
 3,436  
 —  
 500  
 3,936  
 14 

September 18, 2018 
conversion 
 5,670  
 —  
 —  
 5,670  
 19 

September 20, 2018 
conversion 
 3,448  
 —  
 500  
 3,948  
 19 

September 21, 2018 
conversion 
 6,720  
 —  
 —  
 6,720  
 19 

September 24, 2018 
conversion 
 5,250  
 —  
 —  
 5,250  
 18 

September 26, 2018 
conversion 
 6,132  
 —  
 —  
 6,132  
 23 

September 28, 2018 
conversion 
 3,084  
 —  
 500  
 3,584  
 23 

October 1, 2018 
conversion 
 3,100  
 —  
 —  
 3,100  
 20 

October 3, 2018 
conversion 
 4,030  
 —  
 —  
 4,030  
 26 

October 3, 2018 
conversion 
 2,202  
 —  
 500  
 2,702  
 25 

October 5, 2018 
conversion 
 2,750  
 485  
 —  
 3,235  
 16 

October 5, 2018 
conversion 
 4,449  
 —  
 —  
 4,449  
 29 

October 8, 2018 
conversion 
 8,835  
 —  
 —  
 8,835  
 105 

October 9, 2018 
conversion 
 4,158  
 —  
 500  
 4,658  
 30 

 

 - 15 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

October 10, 2018 
conversion 
 4,988  
 —  
 —  
 4,988  
 29 

October 15, 2018 
conversion 
 5,935  
 —  
 —  
 5,935  
 33 

October 18, 2018 
conversion 
 9,000  
 —  
 —  
 9,000  
 113 

October 19, 2018 
conversion 
 4,400  
 713  
 —  
 5,113  
 33 

October 23, 2018 
conversion 
 9,840  
 —  
 —  
 9,840  
 317 

November 1, 2018 
conversion 
 9,400  
 —  
 —  
 9,400  
 94 

November 5, 2018 
conversion 
 6,195  
 —  
 —  
 6,195  
 52 

November 15, 2018 
conversion 
 7,980  
 —  
 —  
 7,980  
 95 

November 27, 2018 
conversion 
 3,850  
 724  
 —  
 4,574  
 123 

December 6, 2018 
conversion 
 4,056  
 797  
 —  
 4,853  
 141 

December 7, 2018 
conversion 
 2,034  
 —  
 —  
 2,034  
 66 

December 10, 2018 
conversion 
 2,367  
 —  
 —  
 2,367  
 76 

December 10, 2018 
conversion 
 2,333  
 —  
 500  
 2,833  
 91 

December 10, 2018 
conversion 
 1,475  
 —  
 500  
 1,975  
 91 

December 10, 2018 
conversion 
 3,348  
 —  
 —  
 3,348  
 90 

December 11, 2018 
conversion 
 2,489  
 —  
 —  
 2,489  
 80 

December 11, 2018 
conversion 
 4,340  
 —  
 —  
 4,340  
 140 

December 12, 2018 
conversion 
 3,500  
 —  
 —  
 3,500  
 94 

December 12, 2018 
conversion 
 6,600  
 1,306  
 —  
 7,906  
 213 

December 13, 2018 
conversion 
 2,408  
 —  
 500  
 2,908  
 134 

December 13, 2018 
conversion 
 3,426  
 —  
 —  
 3,426  
 111 

December 14, 2018 
conversion 
 4,154  
 —  
 —  
 4,154  
 134 

December 18, 2018 
conversion 
 4,368  
 —  
 —  
 4,368  
 141 

December 19, 2018 
conversion 
 3,100  
 —  
 500  
 3,600  
 160 

December 19, 2018 
conversion 
 1,000  
 3,348  
 —  
 4,348  
 161 

December 20, 2018 
conversion 
 —  
 —  
 —  
 —  
 130 

December 20, 2018 
conversion 
 2,155  
 —  
 500  
 2,655  
 169 

December 20, 2018 
conversion 
 3,636  
 —  
 —  
 3,636  
 117 

December 20, 2018 
conversion 
 7,480  
 1,520  
 —  
 9,000  
 333 

December 24, 2018 
conversion 
 2,970  
 —  
 —  
 2,970  
 110 

December 26, 2018 
conversion 
 3,213  
 —  
 —  
 3,213  
 143 

December 27, 2018 
conversion 
 1,870  
 1,381  
 —  
 3,252  
 120 

December 28, 2018 
conversion 
 3,700  
 —  
 500  
 4,200  
 227 

December 31, 2018 
conversion 
 4,869  
 —  
 —  
 4,869  
 216 

December 31, 2018 
conversion 
 5,365  
 —  
 —  
 5,365  
 290 

January 2, 2019 
conversion 
 7,370  
 1,562  
 —  
 8,932  
 425 

January 7, 2019 
conversion 
 3,360  
 —  
 —  
 3,360  
 240 

January 7, 2019 
conversion 
 3,944  
 —  
 —  
 3,944  
 290 

January 8, 2019 
conversion 
 4,080  
 —  
 —  
 4,080  
 300 

January 9, 2019 
conversion 
 3,161  
 —  
 500  
 3,661  
 317 

January 10, 2019 
conversion 
 3,380  
 —  
 —  
 3,380  
 325 

January 11, 2019 
conversion 
 5,280  
 1,150  
 —  
 6,430  
 397 

January 11, 2019 
conversion 
 3,625  
 —  
 —  
 3,625  
 290 

January 14, 2019 
conversion 
 3,400  
 —  
 —  
 3,400  
 340 

January 15, 2019 
conversion 
 4,100  
 —  
 —  
 4,100  
 410 

January 15, 2019 
conversion 
 4,300  
 —  
 —  
 4,300  
 430 

January 17, 2019 
conversion 
 4,800  
 —  
 —  
 4,800  
 480 

January 22, 2019 
conversion 
 4,435  
 —  
 —  
 4,435  
 504 

January 22, 2019 
conversion 
 4,230  
 —  
 —  
 4,230  
 470 

January 23, 2019 
conversion 
 3,816  
 —  
 —  
 3,816  
 530 

January 25, 2019 
conversion 
 3,781  
 —  
 —  
 3,781  
 556 

January 28, 2019 
conversion 
 3,276  
 —  
 —  
 3,276  
 585 

January 29, 2019 
conversion 
 3,690  
 —  
 —  
 3,690  
 615 

January 29, 2019 
conversion 
 3,870  
 —  
 —  
 3,870  
 645 

 

 - 16 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

January 30, 2019 
conversion 
 4,080  
 —  
 —  
 4,080  
 680 

January 31, 2019 
conversion 
 4,500  
 —  
 —  
 4,500  
 750 

January 31, 2019 
conversion 
 4,290  
 —  
 —  
 4,290  
 715 

February 4, 2019 
conversion 
 4,740  
 —  
 —  
 4,740  
 790 

February 5, 2019 
cancellation 
 (2,658) 
 —  
 —  
 (2,658) 
 (17)

February 5, 2019 
conversion 
 4,980  
 —  
 —  
 4,980  
 830 

February 12, 2019 
conversion 
 5,340  
 —  
 —  
 5,340  
 890 

February 14, 2019 
conversion 
 5,236  
 —  
 —  
 5,236  
 935 

February 21, 2019 
conversion 
 4,956  
 —  
 —  
 4,956  
 900 

Number of shares outstanding February 28, 2019 
  
    
    
    
    
 20,026 

May 6, 2019 
conversion 
 5,768  
 —  
 —  
 5,768  
 1,030 

May 6, 2019 
conversion 
 15,000  
 —  
 —  
 15,000  
 882 

May 6, 2019 
conversion 
 11,900  
 —  
 —  
 11,900  
 992 

May 7, 2019 
conversion 
 6,048  
 —  
 —  
 6,048  
 1,080 

May 7, 2019 
conversion 
 11,900  
 —  
 —  
 11,900  
 992 

May 8, 2019 
conversion 
 6,384  
 —  
 —  
 6,384  
 1,140 

May 8, 2019 
conversion 
 11,800  
 —  
 —  
 11,800  
 983 

May 8, 2019 
conversion 
 7,312  
 —  
 500  
 7,812  
 1,240 

May 9, 2019 
conversion 
 12,500  
 —  
 —  
 12,500  
 1,136 

May 10, 2019 
conversion 
 7,200  
 —  
 —  
 7,200  
 655 

May 8, 2019 
conversion 
 4,400  
 —  
 —  
 4,400  
 1,000 

May 13, 2019 
conversion 
 7,493  
 —  
 —  
 7,493  
 1,338 

May 13, 2019 
conversion 
 12,650  
 3,786  
 —  
 16,436  
 1,957 

May 21, 2019 
conversion 
 3,281  
 —  
 —  
 3,281  
 586 

May 22, 2019 
conversion 
 11,550  
 3,526  
 —  
 15,076  
 2,094 

July 11, 2019 
conversion 
 11,000  
 3,984  
 —  
 14,984  
 1,921 

July 25, 2019 
conversion 
 8,584  
 —  
 —  
 8,584  
 2,000 

July 30, 2019 
conversion 
 16,940  
 6,350  
 —  
 23,290  
 3,882 

July 31, 2019 
conversion 
 9,872  
 —  
 —  
 9,872  
 2,300 

August 2, 2019 
conversion 
 10,301  
 —  
 —  
 10,301  
 2,400 

August 8, 2019 
conversion 
 21,450  
 8,170  
 —  
 29,620  
 4,937 

August 11, 2019 
conversion 
 10,945  
 —  
 —  
 10,945  
 2,550 

August 11, 2019 
conversion 
 5,837  
 —  
 —  
 5,837  
 1,360 

August 12, 2019 
conversion 
 8,800  
 —  
 —  
 8,800  
 2,750 

August 12, 2019 
conversion 
 13,915  
 5,337  
 —  
 19,252  
 4,011 

August 13, 2019 
conversion 
 3,528  
 —  
 —  
 3,528  
 1,260 

August 14, 2019 
conversion 
 5,920  
 —  
 —  
 5,920  
 2,960 

August 15, 2019 
conversion 
 12,650  
 4,877  
 —  
 17,527  
 5,842 

August 15, 2019 
conversion 
 6,200  
 —  
 —  
 6,200  
 3,100 

August 16, 2019 
conversion 
 8,060  
 —  
 —  
 8,060  
 4,030 

August 19, 2019 
conversion 
 6,784  
 —  
 —  
 6,784  
 4,240 

August 20, 2019 
conversion 
 7,136  
 —  
 —  
 7,136  
 4,460 

August 20, 2019 
conversion 
 12,100  
 4,705  
 —  
 16,805  
 7,002 

August 21, 2019 
conversion 
 4,284  
 5,628  
 —  
 9,912  
 4,690 

August 22, 2019 
conversion 
 —  
 6,348  
 —  
 6,348  
 5,290 

August 23, 2019 
conversion 
 —  
 4,400  
 —  
 4,400  
 5,500 

August 26, 2019 
conversion 
 7,810  
 3,068  
 —  
 10,878  
 9,065 

August 26, 2019 
conversion 
 —  
 3,416  
 —  
 3,416  
 4,270 

August 27, 2019 
conversion 
 —  
 2,240  
 —  
 2,240  
 2,800 

August 29, 2019 
conversion 
 —  
 5,344  
 —  
 5,344  
 6,680 

September 3, 2019 
conversion 
 —  
 5,616  
 —  
 5,616  
 7,020 

September 3, 2019 
conversion 
 6,149  
 2,449  
 —  
 8,598  
 14,329 

 

 - 17 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

September 4, 2019 
conversion 
 —  
 2,956  
 —  
 2,956  
 7,390 

September 5, 2019 
conversion 
 —  
 3,240  
 —  
 3,240  
 8,100 

September 6, 2019 
conversion 
 —  
 3,560  
 —  
 3,560  
 8,900 

September 9, 2019 
conversion 
 —  
 3,752  
 —  
 3,752  
 9,380 

September 10, 2019 
conversion 
 —  
 3,944  
 —  
 3,944  
 9,860 

September 10, 2019 
conversion 
 6,826  
 2,750  
 —  
 9,575  
 15,959 

September 11, 2019 
conversion 
 —  
 4,129  
 —  
 4,129  
 10,300 

September 12, 2019 
conversion 
 2,447  
 2,233  
 —  
 4,680  
 11,700 

September 13, 2019 
conversion 
 4,920  
 —  
 —  
 4,920  
 12,300 

September 16, 2019 
conversion 
 2,818  
 2,342  
 —  
 5,160  
 12,900 

September 17, 2019 
conversion 
 —  
 2,960  
 —  
 2,960  
 7,400 

September 18, 2019 
conversion 
 —  
 4,760  
 —  
 4,760  
 11,900 

September 19, 2019 
conversion 
 —  
 2,920  
 —  
 2,920  
 7,300 

September 20, 2019 
conversion 
 202  
 1,998  
 —  
 2,200  
 5,500 

September 25, 2019 
conversion 
 4,506  
 234  
 —  
 4,740  
 12,600 

October 3, 2019 
conversion 
 5,651  
 349  
 —  
 6,000  
 15,000 

October 10, 2019 
conversion 
 3,760  
 280  
 —  
 4,040  
 10,100 

October 25, 2019 
conversion 
 2,584  
 556  
 —  
 3,140  
 15,700 

November 4, 2019 
conversion 
 2,926  
 354  
 —  
 3,280  
 16,400 

November 27, 2019 
conversion 
 2,970  
 770  
 —  
 3,740  
 18,700 

January 3, 2020 
conversion 
 —  
 2,640  
 —  
 2,640  
 13,200 

January 27, 2020 
conversion 
 3,360  
 —  
 —  
 3,360  
 16,800 

February 1, 2020 
cancellation 
 (3,360) 
 —  
 —  
 (3,360) 
 (16,800)

February 5, 2020 
cancellation 
 —  
 (640) 
 —  
 (640) 
 (3,200)

February 5, 2020 
conversion 
 —  
 4,060  
 —  
 4,060  
 20,300 

February 29, 2020 
rounding shares issuable 
 —  
 —  
 —  
 —  
 2,946 

Number of shares outstanding February 29, 2020 
  
    
    
    
    
 418,415 

March 29, 2020 
Conversion 
 —  
 2,568  
 —  
 2,568  
 21,400 

March 30, 2020 
Conversion 
 742  
 —  
 500  
 1,242  
 20,700 

March 31, 2020 
Conversion 
 —  
 1,013  
 —  
 1,013  
 21,100 

April 3, 2020 
Conversion 
 —  
 936  
 —  
 936  
 19,500 

April 6, 2020 
Conversion 
 868  
 —  
 500  
 1,368  
 22,800 

April 7, 2020 
Conversion 
 —  
 1,186  
 —  
 1,186  
 24,700 

April 7, 2020 
Conversion 
 1,500  
 —  
 500  
 2,000  
 25,000 

April 8, 2020 
Conversion 
 —  
 1,104  
 —  
 1,104  
 23,000 

April 13, 2020 
Conversion 
 —  
 1,474  
 —  
 1,474  
 30,700 

April 14, 2020 
Conversion 
 —  
 1,272  
 —  
 1,272  
 26,500 

April 16, 2020 
Conversion 
 1,456  
 —  
 500  
 1,956  
 32,600 

April 17, 2020 
Conversion 
 —  
 1,613  
 —  
 1,613  
 33,600 

April 20, 2020 
Conversion 
 —  
 1,776  
 —  
 1,776  
 37,000 

April 20, 2020 
Conversion 
 1,200  
 —  
 500  
 1,700  
 23,611 

April 21, 2020 
Conversion 
 —  
 1,448  
 —  
 1,448  
 31,000 

April 23, 2020 
Conversion 
 —  
 1,773  
 —  
 1,773  
 38,500 

April 24, 2020 
Conversion 
 —  
 1,392  
 —  
 1,392  
 43,500 

April 24, 2020 
Conversion 
 1,941  
 —  
 500  
 2,441  
 42,420 

April 27, 2020 
Conversion 
 —  
 1,469  
 —  
 1,469  
 45,900 

April 28, 2020 
Conversion 
 —  
 781  
 —  
 781  
 24,400 

April 28, 2020 
Conversion 
 —  
 1,376  
 —  
 1,376  
 43,000 

April 29, 2020 
Conversion 
 2,400  
 —  
 500  
 2,900  
 48,333 

April 30, 2020 
Conversion 
 —  
 1,408  
 —  
 1,408  
 44,000 

April 30, 2020 
Conversion 
 2,225  
 —  
 500  
 2,725  
 54,500 

May 1, 2020 
Conversion 
 —  
 1,792  
 —  
 1,792  
 56,009 

May 4, 2020 
Conversion 
 —  
 1,728  
 —  
 1,728  
 54,000 

May 4, 2020 
Conversion 
 5,060  
 2,719  
 —  
 7,779  
 129,643 

 

 - 18 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

May 4, 2020 
Conversion 
 2,724  
 —  
 500  
 3,224  
 71,640 

May 5, 2020 
Conversion 
 —  
 2,365  
 —  
 2,365  
 73,900 

May 6, 2020 
Conversion 
 3,750  
 —  
 500  
 4,250  
 78,703 

May 7, 2020 
Conversion 
 —  
 2,170  
 —  
 2,170  
 67,800 

May 7, 2020 
Conversion 
 2,640  
 —  
 500  
 3,140  
 78,500 

May 8, 2020 
Conversion 
 —  
 1,592  
 —  
 1,592  
 59,400 

May 11, 2020 
Conversion 
 1,843  
 —  
 500  
 2,343  
 90,100 

May 12, 2020 
Conversion 
 —  
 2,095  
 —  
 2,095  
 100,700 

May 12, 2020 
Conversion 
 1,910  
 —  
 500  
 2,410  
 95,000 

May 12, 2020 
Conversion 
 4,070  
 2,208  
 —  
 6,278  
 201,231 

May 13, 2020 
Conversion 
 —  
 2,413  
 —  
 2,413  
 116,000 

May 14, 2020 
Conversion 
 —  
 1,936  
 —  
 1,936  
 94,000 

May 14, 2020 
Conversion 
 2,698  
 —  
 500  
 3,198  
 123,000 

May 14, 2020 
Conversion 
 3,300  
 —  
 500  
 3,800  
 121,794 

May 15, 2020 
Conversion 
 —  
 1,764  
 —  
 1,764  
 98,000 

May 15, 2020 
Conversion 
 4,510  
 2,416  
 —  
 6,926  
 232,206 

May 18, 2020 
Conversion 
 —  
 2,728  
 —  
 2,728  
 155,000 

May 19, 2020 
Conversion 
 —  
 2,546  
 —  
 2,546  
 148,000 

May 19, 2020 
Conversion 
 3,108  
 —  
 500  
 3,608  
 164,000 

May 19, 2020 
Conversion 
 3,108  
 —  
 500  
 3,608  
 164,000 

May 19, 2020 
Conversion 
 2,450  
 —  
 500  
 2,950  
 121,399 

May 20, 2020 
Conversion 
 —  
 2,477  
 —  
 2,477  
 144,000 

May 21, 2020 
Conversion 
 —  
 3,560  
 —  
 3,560  
 207,000 

May 22, 2020 
Conversion 
 3,600  
 —  
 500  
 4,100  
 210,000 

May 22, 2020 
Conversion 
 5,665  
 3,112  
 —  
 8,777  
 416,744 

May 25, 2020 
Conversion 
 3,238  
 —  
 500  
 3,738  
 230,000 

May 26, 2020 
Conversion 
 —  
 3,120  
 —  
 3,120  
 240,000 

May 27, 2020 
Conversion 
 —  
 2,280  
 —  
 2,280  
 190,000 

May 28, 2020 
Conversion 
 —  
 2,148  
 —  
 2,148  
 179,000 

May 28, 2020 
Conversion 
 6,050  
 3,347  
 —  
 9,397  
 522,072 

May 28, 2020 
Rounding shares 
 —  
 —  
 —  
 —  
 9 

May 29, 2020 
Conversion 
 4,000  
 —  
 500  
 4,500  
 257,731 

June 1, 2020 
Conversion 
 —  
 2,367  
 —  
 2,367  
 202,000 

June 1, 2020 
Conversion 
 4,380  
 —  
 —  
 4,380  
 300,000 

June 1, 2020 
Conversion 
 8,680  
 —  
 —  
 8,680  
 620,000 

June 3, 2020 
Conversion 
 —  
 3,427  
 —  
 3,427  
 357,000 

June 4, 2020 
Conversion 
 4,372  
 —  
 500  
 4,872  
 435,000 

June 4, 2020 
Conversion 
 —  
 2,554  
 —  
 2,554  
 285,000 

June 3, 2020 
Conversion 
 7,095  
 3,954  
 —  
 11,049  
 754,703 

June 4, 2020 
Conversion 
 9,744  
 —  
 —  
 9,744  
 870,000 

June 5, 2020 
Conversion 
 —  
 3,916  
 —  
 3,916  
 445,000 

June 8, 2020 
Conversion 
 4,770  
 —  
 —  
 4,770  
 530,000 

June 8, 2020 
Conversion 
 —  
 2,980  
 —  
 2,980  
 487,000 

June 8, 2020 
Conversion 
 6,600  
 3,700  
 —  
 10,300  
 1,122,004 

June 9, 2020 
Conversion 
 3,593  
 —  
 500  
 4,093  
 535,000 

June 10, 2020 
Conversion 
 4,396  
 —  
 500  
 4,896  
 640,000 

June 10, 2020 
Conversion 
 —  
 2,472  
 —  
 2,472  
 404,000 

June 11, 2020 
Conversion 
 —  
 2,935  
 —  
 2,935  
 587,000 

June 11, 2020 
Conversion 
 4,320  
 —  
 —  
 4,320  
 720,000 

June 12, 2020 
Conversion 
 6,600  
 3,718  
 —  
 10,318  
 1,433,000 

June 15, 2020 
Conversion 
 —  
 3,126  
 —  
 3,126  
 704,000 

June 15, 2020 
Conversion 
 9,435  
 —  
 —  
 9,435  
 1,700,000 

June 15, 2020 
Conversion 
 4,218  
 —  
 500  
 4,718  
 850,000 

June 17, 2020 
Conversion 
 —  
 3,135  
 —  
 3,135  
 825,000 

 

 - 19 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

June 17, 2020 
Conversion 
 4,750  
 —  
 —  
 4,750  
 1,000,000 

June 17, 2020 
Conversion 
 5,830  
 3,303  
 —  
 9,133  
 1,902,773 

June 18, 2020 
Conversion 
 —  
 2,608  
 —  
 2,608  
 815,000 

June 18, 2020 
Conversion 
 4,300  
 —  
 500  
 4,800  
 1,200,000 

June 19, 2020 
Conversion 
 3,500  
 —  
 500  
 4,000  
 1,000,000 

June 19, 2020 
Conversion 
 —  
 2,797  
 —  
 2,797  
 874,000 

June 19, 2020 
Conversion 
 6,490  
 3,686  
 —  
 10,176  
 2,119,985 

June 22, 2020 
Conversion 
 —  
 4,627  
 —  
 4,627  
 1,446,000 

June 22, 2020 
Conversion 
 6,930  
 3,950  
 —  
 10,880  
 2,266,600 

June 23, 2020 
Conversion 
 —  
 5,120  
 —  
 5,120  
 1,600,000 

June 22, 2020 
Conversion 
 10,000  
 —  
 —  
 10,000  
 2,500,000 

June 23, 2020 
Conversion 
 6,100  
 —  
 500  
 6,600  
 1,650,000 

June 23, 2020 
Conversion 
 10,120  
 5,775  
 —  
 15,895  
 3,311,362 

June 23, 2020 
Conversion 
 2,488  
 —  
 500  
 2,988  
 747,000 

June 24, 2020 
Conversion 
 8,400  
 —  
 —  
 8,400  
 2,100,000 

June 24, 2020 
Conversion 
 17,200  
 —  
 —  
 17,200  
 4,300,000 

June 24, 2020 
Conversion 
 10,120  
 5,781  
 —  
 15,901  
 3,312,766 

June 24, 2020 
Conversion 
 1,150  
 —  
 500  
 1,650  
 343,750 

June 25, 2020 
Conversion 
 —  
 7,040  
 —  
 7,040  
 2,200,000 

June 25, 2020 
Conversion 
 10,300  
 —  
 500  
 10,800  
 2,700,000 

June 25, 2020 
Conversion 
 11,275  
 6,448  
 —  
 17,723  
 3,692,421 

June 26, 2020 
Conversion 
 —  
 6,400  
 —  
 6,400  
 2,000,000 

June 29, 1930 
Conversion 
 12,800  
 —  
 —  
 12,800  
 3,200,000 

June 29, 2020 
Conversion 
 3,355  
 485  
 —  
 3,840  
 1,200,000 

June 30, 2020 
Conversion 
 4,841  
 119  
 —  
 4,960  
 1,550,000 

June 29, 2020 
Conversion 
 13,000  
 861  
 —  
 13,861  
 2,887,685 

July 1, 2020 
Conversion 
 12,980  
 —  
 500  
 13,480  
 3,370,000 

July 1, 2020 
Conversion 
 22,800  
 —  
 —  
 22,800  
 5,700,000 

July 1, 2020 
Conversion 
 12,485  
 7,191  
 —  
 19,676  
 4,099,085 

July 1, 2020 
Conversion 
 5,222  
 116  
 —  
 5,338  
 1,668,000 

July 2, 2020 
Conversion 
 7,248  
 112  
 —  
 7,360  
 2,300,000 

July 6, 2020 
Conversion 
 16,088  
 —  
 —  
 16,088  
 4,021,875 

July 1, 2020 
Conversion 
 13,250  
 861  
 —  
 14,111  
 2,945,058 

July 6, 2020 
Conversion 
 17,600  
 10,195  
 —  
 27,795  
 5,790,666 

July 7, 2020 
Conversion 
 7,462  
 538  
 —  
 8,000  
 2,500,000 

July 8, 2020 
Conversion 
 6,297  
 103  
 —  
 6,400  
 2,000,000 

July 9, 2020 
Conversion 
 18,150  
 10,550  
 —  
 28,700  
 5,979,187 

July 9, 2020 
Conversion 
 20,000  
 —  
 —  
 20,000  
 5,000,000 

July 10, 2020 
Conversion 
 9,403  
 197  
 —  
 9,600  
 3,000,000 

July 14, 2020 
Conversion 
 —  
 10,240  
 —  
 10,240  
 3,200,000 

July 14, 2020 
Conversion 
 12,000  
 —  
 —  
 12,000  
 3,000,000 

July 14, 2020 
Conversion 
 9,230  
 370  
 —  
 9,600  
 3,000,000 

July 14, 2020 
Conversion 
 12,114  
 7,082  
 —  
 19,196  
 3,999,234 

July 14, 2020 
Conversion 
 24,000  
 —  
 —  
 24,000  
 6,000,000 

July 14, 2020 
Conversion 
 —  
 12,800  
 —  
 12,800  
 4,000,000 

July 16, 2020 
Conversion 
 22,611  
 13,782  
 —  
 36,392  
 7,581,749 

July 17, 2020 
Conversion 
 33,000  
 18,736  
 —  
 51,736  
 10,645,130 

July 20, 2020 
Conversion 
 —  
 1,600  
 —  
 1,600  
 500,000 

July 20, 2020 
Conversion 
 32,000  
 —  
 —  
 32,000  
 8,000,000 

July 20, 2020 
Conversion 
 28,600  
 16,249  
 —  
 44,849  
 9,237,550 

July 20, 2020 
Conversion 
 —  
 10,560  
 —  
 10,560  
 3,300,000 

July 21, 2020 
Conversion 
 —  
 6,400  
 —  
 6,400  
 2,000,000 

July 22, 2020 
Conversion 
 —  
 6,400  
 —  
 6,400  
 2,000,000 

July 22, 2020 
Conversion 
 —  
 24,000  
 —  
 24,000  
 7,500,000 

 

 - 20 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

July 23, 2020 
Conversion 
 —  
 6,400  
 —  
 6,400  
 2,000,000 

July 24, 2020 
Conversion 
 —  
 6,400  
 —  
 6,400  
 2,000,000 

July 24, 2020 
Conversion 
 9,000  
 —  
 —  
 9,000  
 2,000,000 

July 24, 2020 
Conversion 
 27,500  
 15,741  
 —  
 43,241  
 6,863,668 

July 27, 2020 
Conversion 
 16,018  
 182  
 —  
 16,200  
 5,000,000 

July 27, 2020 
Conversion 
 —  
 22,680  
 —  
 22,680  
 7,000,000 

July 28, 2020 
Conversion 
 9,150  
 50  
 —  
 9,200  
 2,500,000 

July 29, 2020 
Conversion 
 50,032  
 7,700  
 —  
 57,732  
 9,785,085 

July 29, 2020 
Conversion 
 10,456  
 44  
 —  
 10,500  
 2,500,000 

July 29, 2020 
Conversion 
 —  
 29,400  
 —  
 29,400  
 7,000,000 

July 29, 2020 
Conversion 
 27,500  
 15,833  
 —  
 43,333  
 6,878,219 

July 30, 2020 
Conversion 
 10,463  
 37  
 —  
 10,500  
 2,500,000 

July 30, 2020 
Conversion 
 —  
 29,400  
 —  
 29,400  
 7,000,000 

July 30, 2020 
Conversion 
 57,750  
 —  
 —  
 57,750  
 11,000,000 

July 30, 2020 
Conversion 
 12,570  
 30  
 —  
 12,600  
 3,000,000 

July 31, 2020 
Conversion 
 —  
 29,400  
 —  
 29,400  
 7,000,000 

July 31, 2020 
Conversion 
 23,100  
 13,330  
 —  
 36,430  
 7,019,333 

July 31, 2020 
Conversion 
 6,734  
 66  
 —  
 6,800  
 2,000,000 

August 3, 2020 
Conversion 
 43,500  
 —  
 —  
 43,500  
 10,000,000 

August 3, 2020 
Conversion 
 —  
 29,400  
 —  
 29,400  
 7,000,000 

August 3, 2020 
Conversion 
 —  
 8,500  
 —  
 8,500  
 2,500,000 

August 4, 2020 
Conversion 
 17,985  
 10,427  
 —  
 28,412  
 5,474,293 

August 4, 2020 
Conversion 
    
 5,800  
 —  
 5,800  
 2,500,000 

August 5, 2020 
Conversion 
 27,500  
 13,979  
 —  
 41,479  
 8,837,286 

August 6, 2020 
Conversion 
 33,741  
 18,759  
 —  
 52,500  
 12,500,000 

August 6, 2020 
Conversion 
 —  
 17,000  
 —  
 17,000  
 5,000,000 

August 10, 2020 
Conversion 
 43,294  
 953  
 —  
 44,247  
 15,000,000 

August 11, 2020 
Conversion 
 25,850  
 15,107  
 —  
 40,957  
 17,065,350 

August 11, 2020 
Conversion 
 12,533  
 10,000  
 —  
 22,533  
 11,268,750 

August 12, 2020 
Conversion 
 8,965  
 5,245  
 —  
 14,210  
 5,920,900 

August 14, 2020 
Conversion 
 27,500  
 15,510  
 —  
 43,010  
 17,920,835 

August 14, 2020 
Conversion 
 16,000  
 —  
 —  
 16,000  
 8,000,000 

August 17, 2020 
Conversion 
 —  
 12,000  
 —  
 12,000  
 6,000,000 

August 19, 2020 
Conversion 
 —  
 12,000  
 —  
 12,000  
 6,000,000 

August 19, 2020 
Conversion 
 26,510  
 15,040  
 —  
 41,550  
 17,312,501 

August 27, 2020 
Conversion 
 25,441  
 10,000  
 500  
 35,941  
 17,970,625 

August 28, 2020 
Conversion 
 41,000  
 —  
 —  
 41,000  
 20,000,000 

August 28, 2020 
Conversion 
 38,500  
 21,894  
 —  
 60,394  
 25,164,027 

August 31, 2020 
Conversion 
 39,500  
 —  
 500  
 40,000  
 20,000,000 

September 3, 2020 
Conversion 
 44,990  
 25,974  
 —  
 70,964  
 29,568,429 

September 4, 2020 
Conversion 
 48,100  
 —  
 500  
 48,600  
 27,000,000 

September 10, 2020 
Conversion 
 44,000  
 19,046  
 —  
 63,046  
 29,188,067 

September 14, 2020 
Conversion 
 36,000  
 —  
 —  
 36,000  
 20,000,000 

September 16, 2020 
Conversion 
 36,300  
 15,858  
 —  
 52,158  
 28,976,854 

September 17, 2020 
Conversion 
 30,000  
 —  
 —  
 30,000  
 20,000,000 

September 21, 2020 
Conversion 
 29,700  
 13,074  
 —  
 42,774  
 35,645,000 

September 22, 2020 
Conversion 
 33,500  
 —  
 500  
 34,000  
 34,000,000 

September 22, 2020 
Conversion 
 20,000  
 —  
 —  
 20,000  
 20,000,000 

September 25, 2020 
Conversion 
 27,500  
 12,179  
 —  
 39,679  
 38,900,867 

September 28, 2020 
Conversion 
 21,000  
 —  
 —  
 21,000  
 30,000,000 

September 28, 2020 
Conversion 
 6,850  
 —  
 500  
 7,350  
 15,000,000 

September 29, 2020 
Conversion 
 23,300  
 —  
 500  
 23,800  
 34,000,000 

September 30, 2020 
Conversion 
 27,500  
 12,410  
 —  
 39,910  
 47,511,901 

October 5, 2020 
Conversion 
 27,500  
 11,991  
 —  
 39,491  
 50,630,340 

 

 - 21 - 
Table of Contents 

 


Date 
Transaction (*) 
Principal
Converted  
Interest
Converted  
Fees
Converted  
Total
Amount
Converted  
Shares
Issued** 

October 5, 2020 
Conversion 
 17,500  
 —  
 —  
 17,500  
 25,925,926 

October 6, 2020 
Conversion 
 5,881  
 9,360  
 500  
 15,741  
 24,217,169 

October 6, 2020 
Conversion 
 6,780  
 —  
 500  
 7,280  
 16,000,000 

October 8, 2020 
Conversion 
 33,000  
 14,762  
 —  
 47,762  
 61,233,329 

October 12, 2020 
Conversion 
 27,500  
 12,375  
 —  
 39,875  
 66,458,333 

October 15, 2020 
Conversion 
 41,800  
 26,711  
 —  
 68,511  
 114,185,778 

October 15, 2020 
Conversion 
 6,500  
 —  
 500  
 7,000  
 20,000,000 

October 21, 2020 
Conversion 
 22,000  
 10,032  
 —  
 32,032  
 53,386,667 

October 26, 2020 
Conversion 
 10,000  
 5,000  
 —  
 15,000  
 25,000,000 

October 29, 2020 
Conversion 
 44,000  
 20,298  
 —  
 64,298  
 107,164,443 

October 29, 2020 
Conversion 
 27,500  
 14,000  
 —  
 41,500  
 69,166,666 

November 2, 2020 
Conversion 
 2,500  
 142  
 —  
 2,642  
 4,403,700 

November 9, 2020 
Conversion 
 38,500  
 18,044  
 —  
 56,544  
 94,239,448 

November 17, 2020 
Conversion 
 38,500  
 25,450  
 —  
 63,950  
 106,582,783 

November 24, 2020 
Conversion 
 40,040  
 26,655  
 —  
 66,695  
 111,157,519 

December 1, 2020 
Conversion 
 44,660  
 29,938  
 —  
 74,598  
 124,330,726 

December 3, 2020 
Conversion 
 38,170  
 22,938  
 —  
 61,108  
 101,847,067 

December 10, 2020 
Conversion 
 78,650  
 47,584  
 —  
 126,234  
 210,390,074 

December 28, 2020 
Warrants 
 —  
 —  
 —  
 1,190  
 119,000,000 

January 1, 2021 
Warrants 
 —  
 —  
 —  
 1,250  
 125,000,000 

January 21, 2021 
Warrants 
 —  
 —  
 —  
 736  
 73,650,793 

January 14, 2021 
Warrants 
 —  
 —  
 —  
 1,300  
 130,000,000 

January 20, 2021 
Warrants 
 —  
 —  
 —  
 323  
 32,338,030 

January 20, 2021 
Warrants 
 —  
 —  
 —  
 1,280  
 127,992,278 

February 3, 2021 
Fees 
 —  
 —  
 —  
 —  
 5,000,000 

February 10, 2021 
Warrants 
 —  
 —  
 —  
 —  
 75,000,000 

February 16, 2021 
Warrants 
 —  
 —  
 —  
 —  
 14,268,324 

February 16, 2021 
Warrants 
 —  
 —  
 —  
 —  
 130,000,000 

February 19, 2021 
Conversion 
 82,500  
 27,530  
 —  
 110,030  
 4,075,191 

February 23, 2021 
Warrants 
 —  
 —  
 —  
 —  
 42,189,696 

February 26, 2021 
Warrants 
 —  
 —  
 —  
 —  
 24,771,271 

Number of shares outstanding February 28, 2021 
  
    
    
    
    
 3,229,426,884 

 

 - 22 - 
Table of Contents 

 


Date 
Transaction 
Consideration 
Shares Issued 

March 3, 2021 
Conversion of Series F Preferred Shares 
40 Series F shares converted 
 156,978,130 

March 23, 2021 
Conversion of Series F Preferred Shares 
18 Series F shares converted 
 74,652,380 

April 8, 2021 
Conversion of Series F Preferred Shares 
20 Series F shares converted 
 84,715,488 

June 3, 2021 
Exercise of warrants 
Cashless exercise of 188,000,000 warrants 
 182,000,000 

June 15, 2021 
Exercise of warrants 
Cashless exercise of 11,000,000 warrants 
 9,975,508 

June 15, 2021 
Debt exchange 
$2,545,900 in debt exchanged for common shares 
 39,167,693 

June 15, 2021 
Debt Exchange 
$5,000,875 in debt exchanged for common shares 
 76,936,539 

July 21, 2021 
Exercise of warrants 
Cashless exercise of 112,000,000 warrants 
 108,276,053 

July 26, 2021 
Common stock issued at previous day bid price per note conversion agreement 
Convert a note payable including $275,000 of principal, $16,955 of interest, and $1,750 of fees 
 10,859,436 

August 5, 2021 
Common stock issued at previous day bid price per note conversion agreement 
Convert a note payable including $550,000 of principal, and $55,000 of interest 
 20,183,000 

September 16, 2021 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period 
$0.03 per share for gross proceeds of $601,499 and net proceeds (after issuance costs) of $563,849 
 19,943,616 

September 24, 2021 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period 
$0.03 per share for gross proceeds of $770,141 and net proceeds (after issuance costs) of $691,336 
 24,289,716 

October 7, 2021 
Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period 
$0.02 per share for gross proceeds of $1,182,004 and net proceeds (after issuance costs) of $1,170,788 
 49,000,000 

October 14, 2021 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period 
$0.02 per share for gross proceeds of $1,155,997 and net proceeds (after issuance costs) of $1,090,557 
 55,166,929 

October 19, 2021 
Exercise of warrants 
Cashless exercise of 52,985,075 warrants 
 50,000,000 

October 25, 2021 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period 
$0.03 per share for gross proceeds of $2,708,457 and net proceeds (after issuance costs) of $2,600,119 
 95,368,212 

October 27, 2021 
Exercise of warrants 
Cashless exercise of 47,014,925 warrants 
 44,770,776 

November 11, 2021 
Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period 
$0.03 per share for gross proceeds of $1,358,600 and net proceeds (after issuance costs) of $1,345,014 
 50,000,000 

November 24, 2021 
Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period 
$0.03 per share for gross proceeds of $1,016,515 and net proceeds (after issuance costs) of $1,006,349 
 51,400,000 

January 3, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $1,275,000 and net proceeds (after issuance costs) of $1,183,725 
 100,000,000 

January 19, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.02 per share for gross proceeds of $1,697,110 and net proceeds (after issuance costs) of $1,577,312 
 100,000,000 

February 8, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $1,412,700 and net proceeds (after issuance costs) of $1,312,811 
 100,000,000 

  
Number of shares outstanding February 28, 2022***** 
  
 4,733,110,360 

 

 - 23 - 
Table of Contents 

 


Date 
Transaction 
Consideration 
Shares Issued 

April 6, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $1,350,6500 and net proceeds (after issuance costs) of $1,255,104 
 100,000,000 

May 25, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $411,729 and net proceeds (after issuance costs) of $390,4761 
 33,881,576 

June 6, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $292,268 and net proceeds (after issuance costs) of $276,630 
 23,723,044 

June 15, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $317,845 and net proceeds (after issuance costs) of $300,927 
 28,378,983 

June 27, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $292,386 and net proceeds (after issuance costs) of $276,742 
 26,873,732 

July 8, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $221,755 and net proceeds (after issuance costs) of $209,643 
 22,175,543 

July 11, 2022 
Exercise of warrants 
Cashless exercise of 8,250,000 warrants 
 1,688,178 

July 19, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.01 per share for gross proceeds of $163,167 and net proceeds (after issuance costs) of $153,983 
 16,059,723 

July 21, 2022 
Exercise of warrants 
Cashless exercise of 53,128,210 warrants 
 8,000,001 

August 12, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.009 per share for gross proceeds of $225,065 and net proceeds (after issuance costs) of $212,787 
 23,841,632 

August 22, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.009 per share for gross proceeds of $225,065 and net proceeds (after issuance costs) of $212,787 
 20,638,478 

August 30, 2022 
Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period 
$0.009 per share for gross proceeds of $284,290 and net proceeds (after issuance costs) of $281,280 
 30,000,000 

August 31, 2022 
Cancellation of common stock 
Pursuant to an SEC enforcement action against a lender 
 (17,116,894)

September 7, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.008 per share for gross proceeds of $167,289 and net proceeds (after issuance costs) of $157,900 
 20,348,167 

September 19, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.008 per share for gross proceeds of $147,542 and net proceeds (after issuance costs) of $139,140 
 18,260,143 

September 30, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 5 day period 
$0.007 per share for gross proceeds of $103,152 and net proceeds (after issuance costs) of $96,969 
 14,820,143 

October 12, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.006 per share for gross proceeds of $80,278 and net proceeds (after issuance costs) of $75,240 
 12,543,515 

October 20, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.006 per share for gross proceeds of $94,361 and net proceeds (after issuance costs) of $88,618 
 17,094,439 

October 31, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $89,237 and net proceeds (after issuance costs) of $83,750 
 17,705,725 

November 9, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $72,964 and net proceeds (after issuance costs) of $68,291 
 14,710,472 

 

 - 24 - 
Table of Contents 

 


Date 
Transaction 
Consideration 
Shares Issued 

November 17, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $80,548 and net proceeds (after issuance costs) of $75,496 
 15,490,043 

November 22, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.006 per share for gross proceeds of $354,770 and net proceeds (after issuance costs) of $336,007 
 66,188,441 

December 7, 2022 
Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period 
$0.008 per share for gross proceeds of $231,840 and net proceeds (after issuance costs) of $228,840 
 30,000,000 

December 9, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.006 per share for gross proceeds of $207,058 and net proceeds (after issuance costs) of $195,680 
 32,762,396 

December 20, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $139,080 and net proceeds (after issuance costs) of $131,102 
 25,947,874 

December 29, 2022 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $135,832 and net proceeds (after issuance costs) of $128,016 
 28,778,009 

January 9, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.004 per share for gross proceeds of $123,603 and net proceeds (after issuance costs) of $116,397 
 27,589,862 

January 17, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $118,338 and net proceeds (after issuance costs) of $111,397 
 23,858,593 

January 20, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $214,971 and net proceeds (after issuance costs) of $203,197 
 40,174,120 

January 27, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $303,216 and net proceeds (after issuance costs) of $287,030 
 46,792,519 

February 6, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.007 per share for gross proceeds of $387,943 and net proceeds (after issuance costs) of $367,521 
 60,616,138 

February 10, 2023 
Exercise of warrants 
Cashless exercise of 47,000,000 warrants 
 35,618,378 

February 13, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.007 per share for gross proceeds of $652,837 and net proceeds (after issuance costs) of $619,170 
 90,071,304 

February 22, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.006 per share for gross proceeds of $511,317 and net proceeds (after issuance costs) of 484,726 
 81,316,289 

February 28, 2023 
Common stock issued as penalty pursuant to share purchase agreement 
Corresponding adjustment to paid in capital 
 17,500,000 

February 28, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $253,832 and net proceeds (after issuance costs) of $240,115 
 46,660,225 

  
Number of shares outstanding February 28, 2023***** 
  
 5,836,641,599 

 

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Date 
Transaction 
Consideration 
Shares Issued 

March 13, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $161,778 and net proceeds (after issuance costs) of $152,664 
 29,738,664 

March 23, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $135,635 and net proceeds (after issuance costs) of $127,828 
 27,794,000 

March 31, 2023 
Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period 
$0.005 per share for gross proceeds of $117,378 and net proceeds (after issuance costs) of $110,484 
 25,740,693 

April 12, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.004 per share for gross proceeds of $119,957 and net proceeds (after issuance costs) of $112,934 
 26,776,130 

April 18, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $151,915 and net proceeds (after issuance costs) of $143,294 
 32,185,352 

April 26, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $110,537 and net proceeds (after issuance costs) of $103,985 
 20,998,702 

May 8, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $93,123 and net proceeds (after issuance costs) of $87,442 
 19,082,597 

May 15, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $84,864 and net proceeds (after issuance costs) of $79,595 
 16,574,891 

May 18, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $101,796 and net proceeds (after issuance costs) of $95,681 
 19,882,043 

May 24, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $116,821 and net proceeds (after issuance costs) of $109,954 
 22,465,568 

May 24, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $206,391 and net proceeds (after issuance costs) of $195,046 
 39,690,550 

June 2, 2023 
Common stock issued for services 
Shares having a fair value of $109,200 
 2,100,000 

June 6, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $688,795 and net proceeds (after issuance costs) of $653,331 
 110,383,893 

June 13, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.008 per share for gross proceeds of $1,129,846 and net proceeds (after issuance costs) of $1,072,329 
 141,230,730 

June 23, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.006 per share for gross proceeds of $482,713 and net proceeds (after issuance costs) of $457,552 
 77,357,815 

July 11, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.006 per share for gross proceeds of $621,166 and net proceeds (after issuance costs) of $606,717 
 112,530,022 

July 24, 2023 
Common stock issued for services 
Shares having a fair value of $118,400 
 10,000,000 

July 24, 2023 
Common stock issued for services 
Shares having a fair value of $44,460 
 6,500,000 

July 27, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $$634,182 and net proceeds (after issuance costs) of $620,473 
 121,958,014 

August 14, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.005 per share for gross proceeds of $757,212 and net proceeds (after issuance costs) of $741,044 
 172,093,823 

August 29, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.004 per share for gross proceeds of $658,880 and net proceeds (after issuance costs) of $644,678 
 168,081,707 

September 21, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.003 per share for gross proceeds of $377,244 and net proceeds (after issuance costs) of $368,655 
 120,905,263 

October 10, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $282,315and net proceeds (after issuance costs) of $269,998 
 110,279,407 

 

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Date 
Transaction 
Consideration 
Shares Issued 

October 25, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $272,093 and net proceeds (after issuance costs) of $ 260,185 
 125,969,163 

November 9, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $255,392 and net proceeds (after issuance costs) of $244,151 
 133,016,448 

November 24, 2023 
Common stock issued pursuant to share purchase agreement at 92% VWAP over previous 3 day period 
$0.002 per share for gross proceeds of $281,453 and net proceeds (after issuance costs) of $269,169 
 185,166,153 

December 13, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $1,007,152 and net proceeds (after issuance costs) of $965,841 
 381,497,000 

December 29, 2023 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $516,106 and net proceeds (after issuance costs) of $494,437 
 258,053,000 

January 16, 2024 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $775,600 and net proceeds (after issuance costs) of $743,451 
 312,741,936 

February 1, 2024 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $552,964 and net proceeds (after issuance costs) of $529,821 
 276,482,220 

February 16, 2024 
Common stock issued pursuant to share purchase agreement at 85% VWAP over previous 10 day period 
$0.002 per share for gross proceeds of $589,667 and net proceeds (after issuance costs) of $565,055 
 294,833,575 

  
Number of shares outstanding February 29, 2024 
  
 9,238,750,958 

 
*
Conversions occur at discounts ranging from 40-50% of average market price
**
Shares adjusted for reverse stock splits: 100: 1 on August 24, 2018 and 10,000:1 on March 27, 2020
***
Total proceeds $600
****
Total proceeds $8,922
*****
At February 28, 2022 there were 2,100,000 issuable shares
******
At February 28, 2023 there were 12,100,000 issuable shares
 
In
connection with the foregoing, the Registrant relied upon the exemption from registration under the Securities Act of 1933, as amended
and the rules and regulations of the Securities and Exchange Commission thereunder, in reliance upon Section 4(a)(2) thereof and Regulation
D thereunder.
 
Penny
Stock Regulations
 
The
Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security
that has a market price of less than $5.00 per share. Our Common Stock falls within the definition of penny stock and therefore is subject
to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually,
or $300,000, together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally,
for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction,
of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer
must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s
written agreement to the transaction. In addition, the broker-dealer must disclose the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently,
the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of
investors to sell their Common Stock in the secondary market.
 

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In
addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory
Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must
have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced
securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s
financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the investors’
ability to buy and sell our stock.
 
Purchases
of Equity Securities by the Registrant and Affiliated Purchasers
 
We
have not repurchased any shares of our common stock during the fiscal years ended February 29, 2024 or February 28, 2023.
 
ITEM
6. SELECTED FINANCIAL DATA
 
Not
applicable.
 
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The
following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial
statements and the notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking
statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.
Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result
of a number of factors, including those set forth under the Risk Factors, Forward-Looking Statements and Business sections in this report.
We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking statements.
 
Overview
 
AITX
was incorporated in Florida on March 25, 2010. AITX reincorporated into Nevada on February 17, 2015. AITX’ fiscal year end is February
28 (February 29 during leap year). AITX is located at 10800 Galaxie Ave ,Ferndale Michigan , 48220, and our telephone number is 877-767-6268.
 

 - 28 - 
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Results
of Operations
 
The
following table shows our results of operations for the years ended February 29, 2024 and February 28, 2023. The historical results presented
below are not necessarily indicative of the results that may be expected for any future period.
 


  
Period  
  

  
Year Ended  
Year Ended  
Change 

  
February 29, 2024  
February 28, 2023  
Dollars  
Percentage 

  
   
   
   
  

Revenues 
$2,227,559  
$1,331,956  
$895,603  
 67%

Gross profit 
 1,096,457  
 653,883  
 442,574  
 68%

Operating expenses 
 15,085,869  
 13,344,563  
 1,741,306  
 13%

Loss from operations 
 (13,989,412) 
 (12,690,680) 
 (1,298.732) 
 10%

Other income (expense), net 
 (6,719,304) 
 (5,418,777) 
 (1,300,527) 
 (24%)

Net loss 
$(20,708,716) 
$(18,109,457) 
$(2,599,259) 
 14%

 
The
following table presents revenues from contracts with customers disaggregated by product/service:
 


  
Year Ended  
Year Ended  
Change 

  
February 29, 2024  
February 28, 2023  
Dollars  
Percentage 

Device rental activities 
$1,626,207  
$754,126  
$872,081  
 116%

Direct sales of goods and services 
 601,352  
 577,830  
 23,522  
 4%

  
$2,227,559  
$1,331,956  
$895,603  
 67%

 
Revenue
 
Total
revenue for the year ended February 29, 2024 was $2,227,559, which represented an increase of $895,603 compared to total revenue of $1,331,956
for the year ended February 28, 2023. Rental activities increased by $872,071 or 116%, as the Company continues to grow its product line
and customer base. Direct sales grew by 4% driven by higher training revenue for the year ended February 29, 2024.
 
Gross
profit
 
Total
gross profit for the year ended February 29, 2024 was $1,096,457, which represented an increase of $442,574, compared to total gross
profit of $653,883 for the year ended February 28, 2023. The increase is a result of the increase in revenues above, and gross profit
% which was 49% for the year ended February 29, 2024 was also 49% for the prior year. The Gross profit % was stable as the increase in
higher margin rental activities in the product mix, and overhead being allocated over a higher sales base was offset by a higher inventory
provision for the permanent impairment in value of two products that the Company will not be continuing.in their current form
 
Operating
expenses
 
Operating
expenses for the years ended February 29, 2024 and February 28, 2023 comprised of the following:
 


  
Period  
Change 

  
Year Ended  February 29, 2024  
Year Ended  February 28, 2023  
Dollars  
Percentage 

  
   
   
   
  

Research and development 
$2,878,134  
$3,625,468  
$(747,334) 
 (21%)

General and administrative 
 10,525,531  
 8,980,709  
 1,544,822  
 17%

Depreciation and amortization 
 854,047  
 478,115  
 375,932  
 79%

Impairment on revenue earning devices 
 584,177  
 -  
 548,177  
 - 

Operating lease cost and rent 
 260,406  
 260,271  
 135  
 0%

(Gain) loss on disposal of fixed assets 
 (16,426) 
 -  
 (16,426) 
 - 

 Operating expenses 
$15,085,869  
$13,344,563  
$1,741,306  
 13%

 

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Our
operating expenses were comprised of general and administrative expenses, research and development, depreciation and amortization,
operating lease and rent and a (gain) loss on disposal of fixed assets. General and administrative expenses consisted primarily of
professional services, automobile expenses, advertising, salaries and wages, travel expenses and rent. Our operating expenses during
the years ended February 29, 2024 and February 28, 2023 were $15,085,869 and $13,344,563, respectively. The overall $1,741,206
increase in operating expenses was primarily attributable to the following changes in operating expenses:
 


 
●
Research
    and development expenses decreased by $747,334 as the Company focused on current product development and spent less money on longer
    term projects.

 
 
 

 
●
General
    and administrative expenses increased by $1,544,822 primarily due to the following changes:

 


 
—
For
    the year ended February 29, 2024 stock based compensation to CEO in equity awards was $1,521,000 with a charge of $272,599 for the
    Employee Stock Option Plan (ESOP) all totaling $1,793,599 compare with stock based compensation to CEO in equity awards was $499,500
    with $118,500 fees paid to consultants and a charge of $ 122,050 for the ESOP all totaling $740,050 for the year ended February 28,
    2023. This represents an increase of $1,053,549 in stock based compensation. The stock based compensation for the CEO is payable
    in Series G and has been deferred until after a year.

 
 
 

 
—
Wages,
    salaries and payroll levies for the CEO increased by $731,447 in discretionary bonus charged, $537,747 of which is deferred compensation
    and will not be paid out this year.

 
 
 

 
—
Wages,
    salaries and payroll levies for the staff decreased by $218,382 due to staff reductions early in the fiscal year.

 
 
 

 
—
Professional
                                            fees decreased by $117,726 due to decreases in financial reporting and consulting costs.
 

 
—
Office
    expense increased by $74,476.

 
 
 

 
—
Freight,
    duty and brokerage increased by $154,172 due to higher purchases in 2024.

 
 
 

 
—
Advertising
    and marketing costs decreased by $179,742 as the Company reduced its promotion efforts.

 
 
 

 
—
Bad
    debts expense decreased by $139,989 due to write off of uncollectible accounts in the prior year.

 
 
 

 
—
Supplies
    increased slightly by $11,102.

 
 
 

 
—
Trade
    shows and travel decreased by $111,752 as a result of less promotional and business travel in fiscal 2024.

 
 
 

 
—
The
    remaining increases were distributed amongst other general and administrative accounts such as website design warehouse expense,
    repairs and maintenance, and utilities amongst others.

 


 
●
Operating
    lease cost and rent increased by $135.There was a new vehicle lease and a lease for premises that expired during the current fiscal
    year.

 
 
 

 
●
Depreciation
    and amortization increased by $375,932 due to the increase in revenue earning devices and demo devices, computer equipment, tooling
    ,leasehold improvements and manufacturing equipment in fixed assets.

 
 
 

 
●
(Gain)
    loss on disposal of fixed assets increased by $16,426 due to a vehicle disposal in 2024 that yielded a gain.

 
 
 

 
●
Impairment
    on revenue earning devices was $584,177 for the year ending February 29,2024 due to the discontinuance of two products in their present
    form. There was no such impairment in the prior year’s period

 
Other
income (expense)
 
Other
income (expense) consisted of the change of fair value of derivative instruments interest expense and gain on settlement of debt. Other
income (expense) during the years ended February 29, 2024 and February 28, 2023, was ($6,719,304) and ($5,418,777), respectively.
 

 - 30 - 
Table of Contents 

 

The
change in other income (expense) was due to the following:
 


 
●
Change
    in fair value of derivative liabilities decreased by $3,595 due to the re-valuation of derivative liability on convertible notes
    that were converted or settled during the prior year ended February 28, 2023. At both February29, 2024 and February 28, 2023 there
    was no longer any convertible debt.

 
 
 

 
●
Interest
    expense increased by $1,331,580. Amortization of debt discounts for the year ended February 29, 2024 of $2,384,163 compared with
    $1,980,033 for the year ended February 28, 2023. Interest expense was $4,011,681 for the year ended February 29, 2024 compared with
    $ $3,196,882 for the year ended February 28, 2023. Deferred variable payment obligation (DVPO) expense was $362,200 for the year
    ended February 29,2024 compared with $216,577 for the year ended February 28, 2023. Interest and debt amortization were both higher
    during the current year due to approximately $2 million in new debt.

 
 
 

 
●
Gain
    on settlement of debt increased by $34,788 due to a settlement in accounts payable during the current fiscal year.

 
The
Company’s loss from operations for the year ended February 29, 2024 was $13,989,412 which represented an increase in loss of $1,298,732
compared to a loss of $12,690,680 for the year ended February 28, 2023. The higher revenues and gross profit in 2024 were offset by higher
operating expenses for the reasons set out above. Note that the Company had a net loss of $20,708,716 for the year ended February 29,
2024, as compared to net loss of $18,109,457 for the year ended February 28, 2023. This change is mostly attributable to an increase
in other expense and an increase in general and administrative costs.
 
Going
Concern
 
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a
going concern.
 
For
the year ended February 29, 2024, the Company had negative cash flow from operating activities of $12,951,743. As of February 29, 2024
the Company has an accumulated deficit of $132,962,427 and negative working capital of $18,099,085. Management does not anticipate having
positive cash flow from operations in the near future. These factors raise substantial doubt about the Company’s ability to continue
as a going concern for the twelve months following the issuance of these financial statements.
 
The
Company does not have the resources at this time to repay all its credit and debt obligations, make any payments in the form of dividends
to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.
At the same time management points to its successful history with maintaining Company operations and reminds all with reasonable confidence
this will continue. Management has plans to address the Company’s financial situation as follows:
 
Management
is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be
raised nor can we provide assurance that these possible raises may not have dilutive effects. In March 2023, the Company entered into
an equity financing agreement whereby an investor will purchase up to $30,000,000 of the Company’s common stock at a discount over
a two-year period. There remains approximately $21 million left to issue under this arrangement. Management believes that it has the
necessary support to continue operations by continuing its funding methods in the following ways: growing revenues ,through equity proceeds,
and issuing non-convertible debt. Management has had many recent conversations with the Company’s primary debt holder and believes
that the non-convertible debt on the balance sheet will be extended. Management notes that non-convertible debt on the books has been
extended by this debt holder twice in the past and notes that this debt holder has been a strong supporter of the Company.
 

 - 31 - 
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Capital
Resources
 
The
following table summarizes total current assets, liabilities and working capital for the period indicated:
 


  
February 29, 2024  
February 28, 2023 

  
   
  

Current assets 
$3,616,566  
$3,438,992 

Current liabilities 
 21,715,651  
 15,070,593 

Working capital 
$(18,099,085) 
$(11,631,601)

 
As
of February 29, 2024 and February 28, 2023, we had a cash balance of $105,926 and $939,759, respectively.
 
Summary
of Cash Flows
 


  
Year Ended February 29, 2024  
Year Ended February 28, 2023 

  
   
  

Net cash used in operating activities 
$(12,951,743) 
$(12,577,395)

Net cash provided by (used in) investing activities 
$4,194  
$(308,402)

Net cash provided by financing activities 
$12,113,716  
$9,177,410 

 
Net
cash used in operating activities for the year ended February 29, 2024 was $12,951,753, which included a net loss of $20,708,716,
non-cash activity such as the gain on settlement of debt of ($16,426), amortization of debt discount of $2,384,163, stock based
compensation of $1,793,599, reduction in right of use asset $120,131, accretion of lease liability $130,020, increase in related
party accrued payroll and interest $105,101, inventory provision of $437,820, impairment on revenue earning devices for $584,177,
bad debts expense $42,892, depreciation and amortization of $854,047 and change in operating assets and liabilities of
$1,360,189.
 
Net
cash provided by (used in) investing activities.
 
Net
cash provided by investing activities for the year ended February 29, 2024 was $4,194. This consisted of the purchase of fixed assets
of ($22,165), proceeds of disposal of fixed asset of $21,000 and reimbursement of security deposit of $5,359.
 
Net
cash provided by (used in) financing activities.
 
Net
cash provided by financing activities was $12,113,716 for the year ended February 29, 2024. This consisted of share proceeds net of issuance
costs of $10,825,895 and proceeds from loans payable $1,750,000 offset by repayments of loans payable of $408,000 and net repayments
on loan payable-related party of $54,179, respectively.
 
Off-Balance
Sheet Arrangements
 
We
do not have any outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore,
we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity,
market risk or credit support to us or that engages in leasing, hedging or research and development services with us.
 
Significant
Accounting Policies
 
Use
of Estimates
 
In
order to prepare financial statements in conformity with accounting principals generally accepted in the United States, management must
make estimates , judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent
assets and liabilities, if any , are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates
and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements
are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions
used to value derivative liabilities.
 

 - 32 - 
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Revenue
Earning Devices
 
Revenue
earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The
Company continually evaluates revenue earning devices to determine whether events or changes in circumstances have occurred that may
warrant revision of the estimated useful life or whether the devices should be evaluated for possible impairment. The Company uses a
combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures
impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value.
 
Fixed
Assets
 
Fixed
assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective
assets which range from three to five years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs
which do not improve or extend asset lives are expensed currently.
 


Computer equipment 
 3 years 

Furniture and fixtures 
 3 years 

Office equipment 
 4 years 

Warehouse equipment 
 5 years 

Demo Devices 
 4 years 

Vehicles 
 3 years 

Leasehold improvements 
 5 years, the life of the lease 

 
The
Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying
amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are
removed from the accounts and the resulting gain or loss, if any, is recognized in income.
 
Research
and Development
 
Research
and development costs are expensed in the period they are incurred in accordance with ASC 730, Research and Development unless
they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited
to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project.
If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned.
At February 29, 2024 and February 28, 2023, the Company had no deferred development costs.
 
Sales
of Future Revenues
 
The
Company has entered into transactions, as more fully described in footnote 11, in which it has received funding from investors in exchange
for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage
of sales for those certain revenues. The Company determines whether these agreements constitute sales of future revenues or are in substance
debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement
constitutes a sale of future revenues or debt:
 


 
●
Does
    the agreement purport, in substance, to be a sale

 
●
Does
    the Company have continuing involvement in the generation of cash flows due the investor

 
●
Is
    the transaction cancellable by either party through payment of a lump sum or other transfer of assets

 
●
Is
    the investors rate of return implicitly limited by the terms of the agreement

 
●
Does
    the Company’s revenue for a reporting period underlying the agreement have only a minimal impact on the investor’s rate
    of return

 
●
Does
    the investor have recourse relating to payments due

 
In
the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue
method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method.
As of the date of these financial statements, the Company has determined that all such agreements are debt.
 

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Revenue
Recognition 
 
ASU
2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and
industry specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers
promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange
for those goods or services. Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment
and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted
in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the
amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance
obligation.
 
Distinguishing
Liabilities from Equity
 
The
Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemable
and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The
Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument,
other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of
its equity shares.
 
Once
the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial
instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”).
The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the
Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.
 
Our
CEO and Chairman holds sufficient shares of the Company’s voting stock that give sufficient voting rights under the articles of
incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized
shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company
 
Initial
Measurement
 
The
Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value,
or cash received.
 
Subsequent
Measurement – Financial Instruments Classified as Liabilities
 
The
Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes
in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).
 
Fair
Value of Financial Instruments
 
ASC
Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value
in accordance with generally accepted accounting principles.
 
ASC
Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1)
market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable
inputs).
 
The
fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value
hierarchy under ASC Topic 820 are described as follows:
 

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●
Level
    1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

 
 
 

 
●
Level
    2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
    or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical
    or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset
    or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 
 
 

 
●
Level
    3 – Inputs that are unobservable for the asset or liability.

 
Measured
on a Recurring Basis
 
The
following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the
fair value hierarchy within which those measurements fell:
 


  
   
Fair Value Measurement Using 

  
Amount at Fair Value  
Level 1  
Level 2  
Level 3 

February 29, 2024 
    
    
    
   

Liabilities 
    
    
    
   

Incentive compensation plan payable – revaluation of equity awards payable in Series G shares 
$2,500,000  
$—  
$—  
$2,500,000 

  
    
    
    
   

February 28, 2023 
    
    
    
   

Liabilities 
    
    
    
   

Incentive compensation plan payable – revaluation of equity awards payable in Series G shares 
$979,000  
$—  
$—  
$979,000 

 
The
carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances,
accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
 
Earnings
(Loss) per Share
 
Basic
earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator)
by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential
common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.
In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from
the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
 
Basic
loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share
is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to
include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments.
Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in
nature with regards to earnings per share.
 
Recently
Issued Accounting Pronouncements
 
In
September 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. ASU 2016-13 was issued to provide more decision-useful
information about the expected credit losses on financial instruments and changes the loss impairment methodology. ASU 2016-13 is effective
for reporting periods beginning after December 15, 2019 using a modified retrospective adoption method. A prospective transition approach
is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date. The standard
did not materially impact our consolidated net loss, accumulated deficit, and had no impact on cash flows. The Company has adopted this
on March 1, 2020.
 

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ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
We
do not have any financial instruments that are exposed to significant market risk. We maintain our cash and cash equivalents in bank
deposits and short-term, highly liquid money market investments. A hypothetical 100-basis point increase or decrease in market interest
rates would not have a material impact on the fair value of our cash equivalents securities, or our earnings on such cash equivalents.
 
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
See
Index to Financial Statements and Financial Statement Schedules appearing on pages F-1 through F-36 of this annual report on Form 10-K.
 
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
From
October 31, 2019 through May 29, 2024, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the
related instructions) between the Company and LJ Soldinger & Associates LLC (“LJ Soldinger”) on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedure.
 
ITEM
9A. CONTROLS AND PROCEDURES
 
Evaluation
of Disclosure Controls and Procedures
 
As
of February 29, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer
concluded that, as of February 29, 2024, our disclosure controls and procedures were not effective to ensure that information required
to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the
required time periods and is accumulated and communicated to our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
Limitations
on Systems of Controls
 
Our
management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and
procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.
Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional
analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report
have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements
included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the
periods presented.
 
Management’s
Report on Internal Control over Financial Reporting
 
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed
by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s
board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:
 


 
●
Pertain
    to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets
    of the Company;

 

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●
Provide
    reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
    accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being
    made only in accordance with authorizations of management and directors of the company; and

 
 
 

 
●
Provide
    reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
    assets that could have a material effect on the financial statements.

 
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed,
have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect
to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to
reduce, though not eliminate, this risk.
 
As
of February 29, 2024, management assessed the effectiveness of our internal control over financial reporting based on the criteria for
effective internal control over financial reporting established in Internal Control-Integrated Framework (2013 framework) issued by the
Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on that evaluation,
they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the
inappropriate application of U.S. GAAP rules as more fully described below. This was due to deficiencies that existed in the design or
operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered
to be material weaknesses.
 
The
matters involving internal controls and procedures that our management considered to be material weaknesses under the criteria established
in Internal Control – Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
were: lack of a functioning audit committee; lack of a majority of independent members and a lack of a majority of outside directors
on our board of directors; inadequate segregation of duties consistent with control objectives; management is dominated by a single individual;
use of the inappropriate methodology of allocating proceeds in certain debt transactions and the expensing timing of the related debt
discount; use of inappropriate fair values in certain preferred stock issuances and settlements. The aforementioned material weaknesses
were identified by our Chief Executive Officer in connection with the review of our financial statements as of February 29, 2024.
 
Management
believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that
the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement
in our financial statements in future periods.
 
This
report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities
and Exchange Commission that permit us to provide only management’s report in this annual report.
 
Changes
in Internal Control over Financial Reporting
 
No
changes were made to our internal control over financial reporting during the year ended February 28, 2023 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
 
ITEM
9B. OTHER INFORMATION
 
None.
 

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PART
III
 
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
The
following table sets forth the names, positions and ages of our directors and executive officers as of the date of this report. Our directors
serve for one year and until their successors are elected and qualified. Our officers are elected by the board of directors to a term
of one year and serve until their successor is duly elected and qualified, or until they are removed from office. The board of directors
has no nominating, auditing or compensation committees.
 


Name
 
Age
 
Position

Steven
    Reinharz (1)
 
49
 
Chief
    Executive Officer, Secretary and Director (2)

Anthony
    Brenz
 
63
 
Chief
    Financial Officer

 

 



(1)
Director
    as of March 2, 2021

(2)
All
    directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified.

 
Biographical
information concerning our director and executive officers listed above is set forth below.
 
Steven
Reinharz. RAD was founded by Mr. Reinharz in July of 2016, and he has been continuously employed by RAD and its affiliated companies
since that time. He is the holder of a majority of our capital stock. Mr. Reinharz has served as a member of the Board of Directors since
March 2, 2021 and as our Chief Executive Officer, Chief Financial Officer, and Secretary of the Company since March 2, 2021 and resigned
as our Chief Financial Officer as of April 26, 2021 upon Anthony Brenz’s appointment as our Chief Financial Officer. As our Chief
Executive Officer and President of RAD, Mr. Reinharz leverages his extensive knowledge and interest in robotics and artificial intelligence
to design and develop robotic solutions that increase business efficiency and deliver immediate and impressive cost savings. Mr. Reinharz
is an active voice in both the security and artificial intelligence industries. He started and ran his own security integration company
from the age of 24 to 31, becoming one of California’s leading system integrators. Mr. Reinharz later was part of a team that successfully
sold an integrator to a global security firm for $42 million and has held various other security industry roles. Mr. Reinharz speaks
and contributes to panels at ISC East and West, and ASIS. Mr. Reinharz is a leading member of several industry association committees,
mostly through the Security Industry Association. Mr. Reinharz has called Orange County, California home since 1995, having grown up
in Montreal and Toronto. He earned a dual Bachelor of Science degree in Political Science and Commercial Studies.
 
Anthony
Brenz was appointed as our Chief Financial Officer on April 26, 2021. He is an accomplished senior financial and operational
executive for over 20 years of experience in finance and operations, including corporate strategy, procurement and supply chain, human
resources, and customer service. From April 2018 to December 2020, Anthony Brenz was the Vice President/Director Finance of AirBoss Flexible
Products Company. From September 2014 to April 2018, he was the Chief Financial Officer/Vice President of Finance of Thomson Aerospace
and Defense (a Parker Meggitt Company). From August 2012 to September 2014, he was the Vice President/Director of Finance of M B Aeospace
US Holdings, Inc. Anthony Brenz received a Bachelor of Accountancy from Walsh College in Troy Michigan in 1989 and has been licensed
as a Certified Public Accountant in Michigan since 1989.
 
There
are no family relationships between any of the executive officers and directors.
 
Board
Committees and Director Independence
 
Mr.
Reinharz serves as director, and we do not have a separately designated audit committee, compensation committee or nominating and corporate
governance committee. The functions of those committees are being undertaken by our directors. Since we do not have any independent directors
and have only two directors, our directors believes that the establishment of committees of the Board would not provide any benefits
to our company and could be considered more form than substance.
 
We
currently have an employee director, Mr. Reinharz, but no independent directors, as such term is defined in the listing standards of
The NASDAQ Stock Market, and we do not anticipate appointing additional directors in the near future.
 

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Our
directors are not “audit committee financial experts” within the meaning of Item 401(e) of Regulation S-K. As with most small,
early stage companies, until such time that the Company further develops its business, achieves a stronger revenue base and has sufficient
working capital to purchase directors and officer’s insurance, the Company does not have any immediate prospects to attract independent
directors. When the Company is able to expand our Board of Directors to include one or more independent directors, the Company intends
to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also
qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of
our Board members be independent, and the Company is not currently otherwise subject to any law, rule or regulation requiring that all
or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an
Audit Committee or other committee of our Board of Directors.
 
Procedures
for Nominating Directors
 
There
have been no material changes to the procedures by which security holders may recommend nominees to the Board since the most recently
completed fiscal quarter. We do not have a policy regarding the consideration of any director candidates that may be recommended by our
stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying
and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates
by our stockholders, including the procedures to be followed. Our sole director has not considered or adopted any of these policies,
as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative
size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation
in the near future.
 
While
there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board
will participate in the consideration of director nominees.
 
Director
Qualifications
 
Mr.
Steve Reinharz is our sole director and was appointed on March 2, 2021. He is the founder of our operating company, Robotoc Assistance
Devices, Inc. (see bio on page 33).
 
Code
of Ethics and Business Conduct
 
We
have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics
is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely, and understandable
disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability
for adherence to the provisions of the code of ethics.
 
Director
Compensation
 
We
reimburse our directors for all reasonable ordinary and necessary business-related expenses, but we did not pay any other director’s
fees or any other cash compensation for services rendered as a director during the years ended February 29, 2024 and February 28, 2023
to any of the individuals serving on our Board during that period.
 
Compliance
with Section 16(a) of the Securities Exchange Act of 1934
 
Section
16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of a registered
class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers,
directors and greater than 10% stockholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports
they file. Based on our review of the copies of such forms received by us, or written representations that no other reports were required,
and to the best of our knowledge, we believe that all of our officers, directors, and owners of 10% or more of our common stock filed
all required Forms 3, 4, and 5.
 

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ITEM
11. EXECUTIVE COMPENSATION
 
The
following table summarizes all compensation recorded by us in the past two fiscal years for Mr. Reinharz , our President and Chief Executive
Officer , Anthony Brenz, our Chief Financial Officer and Garret Parsons our former President, Chief Executive Officer and Chief Financial
Officer.
 
2024
AND 2023 SUMMARY COMPENSATION TABLE
 


Name and Principal Position 
Year  
Salary or Fees ($)  
Bonus ($)  
Stock Awards(2) ($)  
Option Awards ($)  
Non-Equity Incentive Plan Compensation ($)  
Non-Qualified Deferred Compensation Earnings ($)  
All Other Compensation ($)  
Total ($) 

Steven Reinharz 
 2024  
 300,000  
 461,233  
 1,521,000  
 —  
 —  
 538,767  
 —  
 2,821,000 

Chief Executive Officer, Chief Financial Officer, Secretary (1) 
 2023  
 300,000  
 280,908  
 499,500  
 —  
 —  
 —  
 —  
 1,080,408 

  
    
    
    
    
    
    
    
    
   

Anthony Brenz 
 2024  
 188,813  
 1,000  
 —  
 17,975  
 —  
 —  
 1,200  
 208,988 

Chief Financial Officer (1) 
 2023  
 190,000  
 1,500  
 —  
 —  
 —  
 —  
 —  
 191,500 

 

 



(1)
Steven
    Reinharz was appointed Chief Executive Officer, Chief Financial Officer and Secretary on March 2, 2021.Mr.Reinharz ceased being Chief
    Financial Officer on June 24, 2021 and on that date appointed Anthony Brenz as Chief Financial Officer

(2)
Stock awards are payable in Series G and are included in long term liabilities as they will not be paid out in the current year.
 
Employment
Agreements
 
On
April 9, 2021 Mr. Reinharz entered into an employment agreement with the Company in connection with his service as Chief Executive Officer.
The agreement began on April 9, 2021 and has a three-year term, renewable thereafter on an annual basis if neither party files a notice
of termination 90 days prior to the term renewal date. The agreement provides for compensation of $240,000 base salary (to be reviewed
annually by the Board of Directors) and bonuses to be granted at the discretion of the Board of Directors. In addition, the Company will
grant stock options to Mr. Reinharz under the following conditions:
 
Award
#1 Mr. Reinharz shall be granted an award of 10,000,000 million shares/options/warrants if Objective #1 is achieved. Objective
#1: the price per share of the Company’s common stock has increased in value to an average of $0.30 for ten (10) days in a
thirty-day trading period. For example, pursuant to a Company Stock Plan, if one is adopted, Mr. Reinharz may elect to exercise Award
#1 on a cash or cashless basis at an exercise price of $0.15 per share/option/warrant.
 
Award
#2 Mr. Reinharz shall be granted an award of 30,000,000 million shares/options/warrants if Objective #2 is achieved. Objective
#2: the price per share of the Company’s common stock has increased in value to an average of $0.50 for ten (10) days in a
thirty-day trading period. For example, pursuant to a Company Stock Plan, if one is adopted, Mr. Reinharz may elect to exercise Award
#2 on a cash or cashless basis at an exercise price of $0.25 per share/option/warrant.
 
On
July 12, 2021 the Company and CEO amended the April 9, 2021 Employment Agreement effective July 1, 2021 whereby the following objectives
and awards were added to the two existing ones:
 


 
Objective
    #3:
Sales
    in any fiscal quarter exceed the total sales in fiscal year 2021 for the first time.

 
 
 

 
Award
    #3:
Five
    hundred (500) shares of Series G preferred stock.

 
 
 

 
Objective
    #4:
One
    hundred fifty (150) devices are deployed in the marketplace.

 
 
 

 
Award
    #4:
Two
    hundred fifty (250) shares of Series G preferred stock.

 

 - 40 - 
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Objective
    #5:
Year-to-date
    sales at any point in fiscal year 2022 exceed One Million Dollars ($1,000,000).

 
 
 

 
Award
    #5:
Two
    hundred fifty (250) shares of Series G preferred stock.

 
 
 

 
Objective
    #6:
The
    price per share of common stock has increased to and maintains a price of Ten Cents ($0.10) or more for ten (10) days in a thirty
    (30) day period.

 
 
 

 
Award
    #6:
Two
    hundred fifty (250) shares of Series G preferred stock.

 
 
 

 
Objective
    #7:
The
    price per share of common stock has increased to and maintains a price of Twenty Cents ($0.20) or more for ten (10) days in a thirty(30)
    day period.

 
 
 

 
Award
    #7:
Five
    hundred (500) shares of Series G preferred stock.

 
 
 

 
Objective
    #8:
The
    RAD 3.0 products are launched into the marketplace by November 30, 2022.

 
 
 

 
Award
    #8:
Five
    hundred (500) shares of Series G preferred stock.

 
 
 

 
Objective
    #9:
RAD
    receives an order for fifty (50) units from a single customer.

 
 
 

 
Award
    #9:
Five
    hundred (500) shares of Series G preferred stock.

 
On
January 31, 2024 the Company added the following Objective effective March 1, 2022:
 
Objective
# 10 In any fiscal quarter, attrition , measured by loss of recurring monthly revenue does not exceed 10%
 
Award
#10 Two hundred fifty (250) shares of Series G preferred stock.
 
The
fair value of the first two awards was obtained through the use of the Monte Carlo method was $69,350 with a charge to stock- based compensation
and a corresponding charge to paid in capital. The fair value of the remaining rewards was determined by calculating the vesting amounts
of each reward and then determining for each reporting period the requisite service rendered and applying that against the cash redemption
value of the number of shares of Series G issuable for each tier in the agreement. For the period ended February 29, 2024 that amount
totaled $1,521,000 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable. For the
period ended February 28, 2023 that amount totaled $499,500 with a charge to stock-based compensation and a corresponding charge to incentive
compensation plan payable.
 
On
April 20,2021 an offer letter was agreed with Anthony Brenz for a base salary of $180,000, a discretionary quarterly bonus and future
participation in the Employee Stock Option Plan. Employment commenced on April 26, 2021 and Mr. Brenz was appointed the Company’s
Chief Financial Officer on June 24, 2021. The base salary was amended to $190,000 on January 1, 2022.
 
Outstanding
Equity Awards at 2024 Fiscal Year-End
 
The
following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for Mr.
Reinharz and Mr Brenz, our sole executive officers outstanding as of February 29, 2024:
 


OPTION AWARDS 
STOCK AWARDS 

Name 
Number of Securities Underlying Unexercised Options (#) Exercisable  
Number of Securities Underlying Unexercised Options (#) Unexercisable  
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options  (#)  
Option Exercise Price ($)  
Option Expiration Date 
Number of Shares or Units of Stock That Have Not Vested (#)  
Market Value of Shares or Units of Stock That Have Not Vested ($)  
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)  
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) 

Steven Reinharz 
         0  
 10,000,000  
 10,000,000  
$0.15  
April 9, 2024 
 0  
 0  
 2,500  
$2,500,000 

Steven Reinharz 
 0  
 30,000,000  
 30,000,000  
$0.25  
April 9, 2024 
    
    
    
   

Anthony Brenz 
 0  
 0  
 4,500,000  
$0.02  
Sept. 1, 2027 
 4,500,000  
$12,825  
    
   

Anthony Brenz 
 0  
 0  
 10,000,000  
$0.02  
Sept. 1, 2028 
 10,000,000  
$28,500  
 0  
 0 

 

 - 41 - 
Table of Contents 

 
On
April 14, 2021, the Shareholders of Series E Preferred Stock and the Board of Directors of our Company (“Board”) approved
and adopted the 2021 Incentive Stock Plan (the “2021 Plan”). On August 11, 2022 the Company amended the 2021 Plan increasing
the maximum number of shares applicable to the 2021 Plan from 5,000,000 to 100,000,000. On August 14.32023 the Company further amended
the plan increasing the maximum shares to 200,000,000.
 
The
purpose of the 2021 Plan is to promote the success of the Company by authorizing incentive awards to retain Directors, executives, selected
Employees and Consultants, and reward participants for making major contributions to the success of the Company. The 2021 Plan authorizes
the granting of stock options, restricted stock, restricted stock units, stock appreciation rights and stock awards. A total of two hundred
million (200,000,000) shares of common stock may be issued under the 2021 Plan. All awards under the 2021 Plan, whether vested or unvested,
are subject to the terms of any recoupment, clawback or similar policy of the Company in effect from time to time, as well as any similar
provisions of applicable law, which could in certain circumstances require repayment or forfeiture of awards or any shares of stock or
other cash or property received with respect to the awards, including any value received from a disposition of the shares acquired upon
payment of the awards. The 2021 Plan will be administered by the Board or any Committee authorized by the Board, if applicable, which
will have the sole authority to, among other things: construe and interpret the 2021 Plan; make rules and regulations relating to the
administration of the 2021 Plan; select participants; and establish the terms and conditions of awards, all in accordance with the terms
of the 2021 Plan. The 2021 Plan will remain in effect until April 14, 2031, unless sooner terminated by the Board. Termination will not
affect awards then outstanding.
 
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
At
May 22, 2024, we had 10,318,917,383 shares of Common Stock issued and outstanding. The following table sets forth information regarding
the beneficial ownership of our Common Stock as of May 7, 2024, and reflects:
 


 
●
each
    of our executive officers;

 
 
 

 
●
each
    of our directors;

 
 
 

 
●
all
    of our directors and executive officers as a group; and

 
 
 

 
●
each
    stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock.

 
Information
on beneficial ownership of securities is based upon a record list of our stockholders and we have determined beneficial ownership in
accordance with the rules of the SEC. We believe, based on the information furnished to us, that the persons and entities named in the
table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable
community property laws, except as otherwise provided below.
 


  
Amount and Nature of  
Percent of 

Name 
Beneficial Ownership (1)  
Common Stock (2) 

  
   
  

Named Executive Officers and Directors: 
    
   

Steven Reinharz (3) 
 34,433,734,378  
 74.99%

Anthony Brenz 
 0  
 0 

Mark Folmer 
 0  
 0 

  
    
   

All executive officers and directors as a group (3 persons) 
 34,433,734,378  
 74.99%

  
    
   

5% Shareholders: 
    
   

Steven Reinharz 
 34,433,734,378  
 74.99%

 

 




(1)
Beneficial
    ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment
    power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable
    or exercisable within 60 days of the date of this table. In determining the percent of common stock owned by a person or entity as
    of the date of this Report, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including
    shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b)
    the denominator is the sum of (i) the total shares of common stock outstanding on as of May 22, 2024 10,318,917,383shares, and (ii)
    the total number of shares that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise stated,
    each beneficial owner has sole power to vote and dispose of its shares.

 
 

(2)
Based
    on 10,318,917,383shares of the Company’s common stock issued and outstanding as of May 22, 2024.

 

 - 42 - 
Table of Contents 

 


(3)
Steve
    Reinharz is a director and the Company’s Chief Executive Officer, Chief Financial Officer and Secretary as well as the CEO
    of RAD and is the holder of (i) 3,350,000 shares of our Series E Preferred Stock and, (ii) 2,450 shares of our Series F Convertible
    Preferred Stock. If Mr. Reinharz converted the 2,450 shares of the Company’s Series F Convertible Preferred Stock, he would
    receive 34,433,734,378 shares of the Company’s common stock, which is included in the chart above as if such conversion has
    occurred. Further, the outstanding shares of Series E preferred stock have the right to take action by written consent or vote based
    on the number of votes equal to twice the number of votes of all outstanding shares of common stock. As a result, the holders of
    Series E preferred stock has 2/3rds of the voting power of all shareholders at any time corporate action requires a vote of shareholders.

 
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
We
do not have a written policy for the review, approval or ratification of transactions with related parties or conflicted transactions.
When such transactions arise, they are referred to our board of directors for its consideration.
 
For
the years ended February 29, 2024 and February 28, 2023, the Company made net repayments of $54,179 and $0, respectively , to its loan
payable-related party. At February 29, 2024, the loan payable-related party was $257,438 and $206,516 at February 28, 2023. As of February
29, 2024, included in the balance due to the related party is $140,013 of deferred salary all of which bears interest at 12%. As of February
28, 2023, included in the balance due to the related party is $108,000 of deferred salary all of which bears interest at 12%. The accrued
interest included at February 29, 2024 was $32,468 (February 28, 2023- $15,660).
 
During
the year ended February 28, 2023 pursuant to the amended Employment Agreement with its Chief Executive Officer the Company accrued $1,521,000
as incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional
awards being met. In January 2024 the Company added an Objective 10 which required the accrual of $2,000,000. There was also a net adjustment
reduction of $479,000 for objectives accrued for but not met.
At
February 28, 2023, the balance of incentive compensation plan payable was $979,000. This will be payable in Series G Preferred Shares
which are redeemable at the Company’s option at $1,000 per share.
 
During
the year ended February 29, 2024, the Company accrued $538,767 in deferred compensation for the CEO. This was in accordance with a December
2023 board action allowing for $ 1 million of discretionary compensation. The Company had already recorded $461,233 in bonus compensation.
There was no deferred compensation for the year ended February 28, 2023, the Company recorded a bonus to the CEO of $280,908.
 
During
the years ended February 29, 2024 and February 28, 2023, the Company was charged $2,810,839 and $3,578,981, respectively in consulting
fees for research and development to a company partially owned by a principal shareholder included in research and development expenses.
The principal shareholder received no compensation from this partially owned research and development company and the fees were spent
on core development projects. As at both February 29, 2024 and February 28, 2023 the balance due to this company was $76,532.
 
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 
On
October 31, 2019 the Board of Directors of the Company approved and ratified the engagement (“Engagement”) of LJ Soldinger
& Associates LLC (“LJ Soldinger”) as the Company’s new independent registered public accounting firm..
 
The
following table shows the fees that were billed for the audit and other services provided by LJ Soldinger for the fiscal years ended
February 29, 2024 and February 28, 2023.
 


  
2024 

Audit Fees 
$422,540 

Audit-Related Fees 
 — 

Tax Fees 
 — 

All Other Fees 
 — 

Total 
$422,540 

 


  
2023 

Audit Fees 
$298,000 

Audit-Related Fees 
 — 

Tax Fees 
 — 

All Other Fees 
 — 

Total 
$298,000 

 

 - 43 - 
Table of Contents 

 
Audit
Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly
Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with
engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result
of, the audit or the review of interim financial statements.
 
Audit-Related
Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably
related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”
The services for the fees disclosed under this category would include consultation regarding correspondence with the SEC, other accounting
consulting and other audit services.
 
Tax
Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance
and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
 
All
Other Fees - This category consists of fees for other miscellaneous items.
 
As
part of its responsibility for oversight of the independent registered public accountants, the Board has established a pre-approval policy
for engaging audit and permitted non-audit services provided by our independent registered public accountants. In accordance with this
policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically
described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Board. All of
the services provided by LJ Soldinger described above were approved by our Board.
 
The
Company’s principal accountant did not engage any other persons or firms other than the principal accountant’s full-time,
permanent employees.
 
PART
IV
 
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
(a)(1)
Financial Statements
 
The
consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the Index to Financial Statements
and Financial Statement Schedules on page F-1 and included on pages F-2 through F-36.
 
(2)
Financial Statement Schedules
 
All
schedules for which provision is made in the applicable accounting regulations of the SEC are either not required under the related instructions,
are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included
herein.
 

 - 44 - 
Table of Contents 

 
(3)
Exhibits.
 


Exhibit
    No.
 
Description
    of Document

2.1
 
Stock Purchase Agreement, dated August 28, 2017, by and among the registrant, Steve Reinharz and Robotic Assistance Devices Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed with the Commission on August 31, 2017).

 
 
 

3.1
 
Articles of Incorporation of the registrant filed with the Nevada Secretary of State on September 8, 2014. (incorporated by reference to Exhibit 3.1 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

 
 
 

3.2
 
Plan and Agreement of Merger of Artificial Intelligence Technology Solutions Inc. (a Florida corporation) and Artificial Intelligence Technology Solutions Inc. (a Nevada corporation). (incorporated by reference to Exhibit 3.2 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

 
 
 

3.3
 
Bylaws of the registrant (incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form S-1 (File No. 333-168530), filed with the Commission on August 4, 2010).

 
 
 

3.4
 
Certificate of Designations filed with the Nevada Secretary of State on February 8, 2017. (incorporated by reference to Exhibit 3.4 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

 
 
 

3.5
 
Certificate of Designations filed with the Nevada Secretary of State on May 3, 2017. (incorporated by reference to Exhibit 3.5 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

 
 
 

3.6
 
Amendment to Certificate of Designations filed with the Nevada Secretary of State on May 3, 2017 (incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed with the Commission on May 12, 2017).

 
 
 

10.1
 
Preferred Stock Purchase Agreement dated January 31, 2017 and entered into between the Company and Capital Venture Holdings LLC. (incorporated by reference to Exhibit 10.1 to the registrant’s transition report on Form 10-KT filed with the Commission on March 12, 2018).

 
 
 

14.1
 
Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant’s registrant statement on Form S-1 (File No. 333-168530), filed with the Commission on August 4, 2010).

 
 
 

21.1
 
List of Subsidiaries. *

 
 
 

23.1
 
Consent of Independent Registered Public Accounting Firm. *

 
 
 

31.1
 
Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer. *

 
 
 

31.2
 
Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial and accounting officer. *

 
 
 

32.1
 
Section 1350 Certification of principal executive officer. *

 
 
 

32.2
 
Section 1350 Certification of principal financial and accounting officer. *

 
 
 

99.1
 
Insider Trading Policy. (incorporated by reference to Exhibit 99.1 to the registrant’s annual report on Form 10-K filed with the Commission on May 28, 2021).

 
 
 

101.INS
 
Inline
    XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded
    within the Inline XBRL document. *

101.SCH
 
Inline
    XBRL Taxonomy Extension Schema Document *

101.CAL
 
Inline
    XBRL Taxonomy Extension Calculation Linkbase Document *

101.DEF
 
Inline
    XBRL Taxonomy Extension Definition Linkbase Document *

101.LAB
 
Inline
    XBRL Taxonomy Extension Label Linkbase Document *

101.PRE
 
Inline
    XBRL Taxonomy Extension Presentation Linkbase Document *

104
 
Cover
    Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) *

 
 



*
Filed
    or furnished herewith.

 

 - 45 - 
Table of Contents 

 
SIGNATURES
 
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
 


 
ARTIFICIAL
    INTELLIGENCE TECHNOLOGY SOLUTIONS INC.

 
 
 

Date:
    May 28, 2024
By:
/s/
    Steven Reinharz

 
 
Steven
    Reinharz

 
 
President,
    Chief Executive Officer

 
 
 

 
 
 

Date:
    May 28, 2024
By:
/s/
    Anthony Brenz

 
 
Anthony
    Brenz

 
 
Chief
    Financial Officer (principal financial and accounting officer)

 
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 


Signature
 
Title
 
Date

 
 
 
 
 

/s/
    Steven Reinharz
 
President,
    Chief Executive Officer and Director (principal executive officer)
 
May
    28, 2024

Steven
    Reinharz
 
 
 
 

 
 
 
 
 

/s/
    Anthony Brenz
 
Chief
    Financial Officer (principal financial and accounting officer)
 
May
    28, 2024

Anthony
    Brenz
 
 
 
 

 

 - 46 - 
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
(FORMERLY
ON THE MOVE SYSTEMS CORP.)
 
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 


Report
    of Independent Registered Public Accounting Firm
F-2

 
 

Consolidated
    Balance Sheets
F-3

 
 

Consolidated
    Statements of Operations
F-4

 
 

Consolidated
    Statement of Stockholders’ Deficit
F-5

 
 

Consolidated
    Statements of Cash Flows
F-6

 
 

Notes
    to the Consolidated Financial Statements
F-7

 

F-1
Table of Contents 

 
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To
the Board of Directors and
Stockholders
of Artificial Intelligence Technology Solutions, Inc.
 
Opinion
on the Financial Statements
 
We
have audited the accompanying consolidated balance sheets of Artificial Intelligence Technology Solutions, Inc. and its subsidiaries
(the “Company”) as of February 29, 2024 and February 28, 2023, and the related consolidated statements of operations, stockholders’
deficit, and cash flows for each of the years in the two-year period ended February 29, 2024, and the related notes (collectively referred
to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of February 29, 2024, and February 28, 2023, and the results of its operations and its cash flows for each of the years
in the two-year period ended February 29, 2024, in conformity with accounting principles generally accepted in the United States of America.
 
Substantial
Doubt about the Company’s Ability to Continue as a Going Concern
 
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company had a net loss of approximately $20.7 million, an accumulated deficit of approximately $133.0
million and stockholders’ deficit of approximately $40.2 million as of and for the year ended February 29, 2024, which raises substantial
doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note
1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Basis
for Opinion
 
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
 
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
 
Critical
Audit Matters
 
Critical
audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be
communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and
(2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
 
/s/
L J Soldinger Associates, LLC
 
Deer
Park, Illinois

May
9, 2024, except for Note 17, as to which the date is May 28, 2024

We
have served as the Company’s auditor since 2019.

PCAOB
Audit ID: 318
 


F-2
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED
BALANCE SHEETS
 


  
February 29, 2024  
February 28, 2023 

ASSETS 
    
   

Current assets: 
    
   

Cash 
$105,926  
$939,759 

Accounts receivable, net 
 756,084  
 265,024 

Device parts inventory, net 
 2,131,599  
 1,637,899 

Prepaid expenses and deposits 
 622,957  
 596,310 

Total current assets 
 3,616,566  
 3,438,992 

Operating lease asset 
 1,139,188  
 1,208,440 

Revenue earning devices, net of accumulated depreciation of $952,844 and $779,839,
    respectively 
 2,480,002  
 1,235,219 

Fixed assets, net of accumulated depreciation of $349,878 and $182,002, respectively 
 268,075  
 315,888 

Trademarks 
 27,080  
 27,080 

Investment at cost 
 50,000  
 50,000 

Security deposit 
 15,880  
 21,239 

Total assets 
$7,596,791  
$6,296,858 

LIABILITIES AND STOCKHOLDERS’ DEFICIT 
    
   

Current liabilities: 
    
   

Accounts payable and accrued expenses 
$2,032,707  
$1,343,379 

Advances payable- related party 
 1,594  
 1,594 

Customer deposits 
 73,702  
 9,900 

Current operating lease liability 
 237,653  
 248,670 

Current portion of deferred variable payment obligation 
 904,377  
 542,177 

Loan payable - related party 
 257,438  
 206,516 

Deferred compensation for CEO 
 538,767  
 — 

Current portion of loans payable, net of discount of $688,598 and $1,651,597 
 13,190,882  
 9,918,389 

Vehicle loan - current portion 
 38,522  
 38,522 

Current portion of accrued interest payable 
 4,440,009  
 2,761,446 

Total current liabilities 
 21,715,651  
 15,070,593 

Non-current operating lease liability 
 889,360  
 950,541 

Loans payable, net of discount of $4,118,332 and $4,130,291, respectively 
 14,798,532  
 15,554,069 

Deferred variable payment obligation 
 2,525,000  
 2,525,000 

Incentive compensation plan payable 
 2,500,000  
 979,000 

Accrued interest payable 
 5,367,805  
 3,060,656 

Total liabilities 
 47,796,348  
 38,139,859 

  
    
   

Commitments and Contingencies 
 -   
 -  

Stockholders’ deficit: 
    
   

Preferred Stock, undesignated; 15,535,000 shares authorized; no shares issued
    and outstanding at February 29, 2024 and February 28, 2023, respectively 
 —  
 — 

Series B Convertible, Redeemable Preferred Stock. $0.001 par value; 8% cumulative
    dividend payable quarterly,$1,200 stated value, 5,000 shares authorized, no shares issued and outstanding at February 29, 2024 and
    February 28, 2023, respectively 
    
   

Series G Redeemable Preferred Stock. $0.001 par value; 100,000 shares authorized,
    no shares issued and outstanding at February 29, 2024 and February 28, 2023, respectively 
 —  
 — 

Series E Preferred Stock, $0.001 par value; 4,350,000 shares authorized; 3,350,000
    and 3,350,000 shares issued and outstanding, respectively 
 3,350  
 3,350 

Series F Convertible Preferred Stock, $1.00 par value; 10,000 shares authorized;
    2,533 and 2,533 shares issued and outstanding, respectively 
 2,533  
 2,533 

Preferred Stock value 
    
   

Common Stock, $0.00001 par value; 15,000,000,000 shares authorized 9,238,750,958
    and 5,848,741,599 shares issued, issuable and outstanding, respectively 
 92,388  
 58,489 

Additional paid-in capital 
 92,565,513  
 80,247,252 

Preferred stock to be issued 
 99,086  
 99,086 

Accumulated deficit 
 (132,962,427) 
 (112,253,711)

Total stockholders’ deficit 
 (40,199,557) 
 (31,843,001)

Total liabilities and stockholders’ deficit 
$7,596,791  
$6,296,858 

 
The
accompanying notes are an integral part of these consolidated financial statements.
 

F-3
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
 


  
Year Ended February 29, 2024  
Year Ended February 28, 2023 

  
   
  

Revenues 
$2,227,559  
$1,331,956 

  
    
   

Cost of Goods Sold 
 1,131,102  
 678,073 

  
    
   

Gross Profit 
 1,096,457  
 653,883 

  
    
   

Operating expenses: 
    
   

Research and development (note 9) 
 2,878,134  
 3,625,468 

General and administrative 
 10,525,531  
 8,980,709 

Depreciation and amortization 
 854,047  
 478,115 

Impairment on revenue earning devices 
 584,177  
 — 

Operating lease cost and rent 
 260,406  
 260,271 

(Gain) loss on disposal of fixed assets 
 (16,426) 
 — 

Total operating expenses 
 15,085,869  
 13,344,563 

  
    
   

Loss from operations 
 (13,989,412) 
 (12,690,680)

  
    
   

Other income (expense), net: 
    
   

Change in fair value of derivative liabilities 
 —  
 3,595 

Interest expense 
 (6,758,044) 
 (5,426,364)

Gain (loss) on settlement of debt 
 38,740  
 3,992 

Total other income (expense), net 
 (6,719,304) 
 (5,418,777)

  
    
   

Net Loss 
$(20,708,716) 
$(18,109,457)

  
    
   

Net loss per share - basic 
$(0.00) 
$(0.00)

  
    
   

Net loss per share - diluted 
$(0.00) 
$(0.00)

  
    
   

Weighted average common share outstanding – basic and diluted 
 7,080,914,317  
 5,091,857,082 

 
The
accompanying notes are an integral part of these consolidated financial statements.
 

F-4
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR
THE YEARS ENDED FEBRUARY 29, 2024 AND FEBRUARY 28, 2023
 


  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Capital  
Deficit  
Deficit 

  
Series E  
Series F  
Series G  
   
Additional  
   
Total 

  
Preferred Stock  
Preferred Stock  
Preferred Stock  
Common Stock  
Paid-In  
Accumulated  
Shareholders’ 

  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Capital  
Deficit  
Deficit 

  
   
   
   
   
   
   
   
   
   
   
  

Balance at February 28, 2022 
 3,350,000  
 3,350  
 2,532  
 101,618  
 —  
$—  
 4,735,210,360  
$47,353  
$73,015,576  
$(94,144,254) 
$(20,976,357)

Issuance of shares net of $447,858 issuance costs 
 —  
 —  
 —  
 —  
 —  
 —  
 1,057,841,576  
 10,579  
 7,760,590  
 —  
 7,771,169 

Cashless exercise of 108,378,210 warrants 
 —  
 —  
 —  
 —  
 —  
 —  
 45,306,557  
 453  
 (453) 
 —  
 — 

Cashless exercise of warrants 
 —  
 —  
 —  
 —  
 —  
 —  
 45,306,557  
 453  
 (453) 
 —  
 — 

Penalty shares issued pursuant to a share purchase agreement 
 —  
 —  
 —  
 —  
 —  
 —  
 17,500,000  
 175  
 (175) 
 —  
 — 

Relative fair value of Series F warrants issued with debt 
 —  
 —  
 1  
 1  
 —  
 —  
 —  
 —  
 1,201,127  
 —  
 1,201,128 

Relative fair value of warrants issued with debt 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 990,467  
 —  
 990,467 

Fair value of 955,000,000 warrants cancelled for debt issuance 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 (2,960,500) 
 —  
 (2,960,500)

Shares issued for services 
 —  
 —  
 —  
 —  
 —  
 —  
 10,000,000  
 100  
 118,400  
 —  
 118,500 

Cancelled shares 
 —  
 —  
 —  
 —  
 —  
 —  
 (17,116,894) 
 (171) 
 171  
 —  
 — 

Stock based compensation - employee stock option plan 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 122,050  
 —  
 122,050 

Rounding 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 (1) 
 —  
 (1)

Net income 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 (18,109,457) 
 (18,109,457)

Balance at February 28, 2023 
 3,350,000  
$3,350  
 2,533  
$101,619  
 —  
$—  
 5,848,741,599  
$58,489  
$80,247,252  
$(112,253,711) 
$(31,843,001)

 


  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Capital  
Deficit  
Deficit 

  
Series E  
Series F  
Series G  
   
Additional  
   
Total 

  
Preferred Stock  
Preferred Stock  
Preferred Stock  
Common Stock  
Paid-In  
Accumulated  
Shareholders’ 

  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Shares  
Amount  
Capital  
Deficit  
Deficit 

  
   
   
   
   
   
   
   
   
   
   
  

Balance at February 28, 2023 
 3,350,000  
 3,350  
 2,533  
 101,619  
 —  
$—  
 5,848,741,599  
$58,489  
$80,247,252  
$(112,253,711) 
$(31,843,001)

Balance 
 3,350,000  
 3,350  
 2,533  
 101,619  
 —  
$—  
 5,848,741,599  
$58,489  
$80,247,252  
$(112,253,711) 
$(31,843,001)

Issuance of shares net of $457,060 issuance costs 
 —  
 —  
 —  
 —  
 —  
 —  
 3,383,509,359  
 33,834  
 10,792,061  
 —  
 10,825,895 

Issuance of shares, net of  issuance costs 
 —  
 —  
 —  
 —  
 —  
 —  
 3,383,509,359  
 33,834  
 10,792,061  
 —  
 10,825,895 

Relative fair value of Series F warrants issued with debt 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 1,209,206  
 —  
 1,209,206 

Shares issued for services 
 —  
 —  
 —  
 —  
 —  
 —  
 6,500,000  
 65  
 44,395  
 —  
 44,460 

Stock based compensation - employee stock option plan 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 272,599  
 —  
 272,599 

Net income 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 (20,708,716) 
 (20,708,716)

Balance at February 29, 2024 
 3,350,000  
$3,350  
 2,533  
$101,619  
 —  
$—  
 9,238,750,958  
$92,388  
$92,565,513  
$(132,962,427) 
$(40,199,557)

Balance 
 3,350,000  
$3,350  
 2,533  
$101,619  
 —  
$—  
 9,238,750,958  
$92,388  
$92,565,513  
$(132,962,427) 
$(40,199,557)

 

F-5
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
 


  
Year Ended February 29, 2024  
Year Ended February 28, 2023 

CASH FLOWS FROM OPERATING ACTIVITIES: 
    
   

Net loss 
$(20,708,716) 
$(18,109,457)

Adjustments to reconcile net loss to net cash used in operating activities: 
    
   

Depreciation and amortization 
 854,047  
 478,115 

Impairment on revenue earning devices 
 584,177  
 — 

Inventory provision 
 437,820  
 130,000 

(Gain) loss on disposal of fixed assets 
 (16,426) 
 — 

Bad debts expense 
 42,892  
 45,110 

Reduction of right of use asset 
 120,131  
 112,396 

Accretion of lease liability 
 130,020  
 141,631 

Stock based compensation 
 1,793,599  
 740,050 

Change in fair value of derivative liabilities 
 —  
 (3,595)

Amortization of debt discounts 
 2,384,163  
 1,980,033 

(Gain) loss on settlement of debt 
 (38,740) 
 (3,992)

Increase (decrease) in related party accrued payroll and interest 
 105,101  
 12,960 

Changes in operating assets and liabilities: 
    
   

Accounts receivable 
 (533,952) 
 119,335 

Prepaid expenses 
 (29,591) 
 (141,734)

Device parts inventory 
 (3,549,121) 
 (1,161,047)

Accounts payable and accrued expenses 
 1,294,286  
 374,529 

Accrued expense, related party 
 —  
 — 

Customer deposits 
 63,802  
 (100)

Operating lease liability payments 
 (233,147) 
 (254,028)

Current portion of deferred variable payment obligations for Payments 
 362,200  
 216,577 

Accrued interest payable 
 3,985,712  
 2,745,822 

Net cash used in operating activities 
 (12,951,743) 
 (12,577,395)

  
    
   

CASH FLOWS FROM INVESTING ACTIVITIES: 
    
   

Purchase of fixed assets 
 (22,165) 
 (258,402)

Purchase of investment 
 —  
 (50,000)

Reimbursement of security deposit 
 5,359  
 — 

Proceeds on disposal of fixed assets 
 21,000  
 — 

Net cash used in investing activities 
 4,194  
 (308,402)

  
    
   

CASH FLOWS FROM FINANCING ACTIVITIES: 
    
   

Share proceeds net of issuance costs 
 10,825,895  
 7,771,169 

Proceeds from convertible notes payable 
 —  
 619,250 

Repayment of convertible debt 
 —  
 (750,000)

Net borrowings loan payable-related party 
 (54,179) 
 — 

Proceeds from loans payable 
 1,750,000  
 3,300,000 

Repayment of loans payable 
 (408,000) 
 (1,763,009)

Net cash provided by financing activities 
 12,113,716  
 9,177,410 

  
    
   

Net change in cash 
 (833,833) 
 (3,708,387)

  
    
   

Cash, beginning of period 
 939,759  
 4,648,146 

  
    
   

Cash, end of period 
$105,926  
$939,759 

  
    
   

Supplemental disclosure of cash and non-cash transactions: 
    
   

Cash paid for interest 
$17,726  
$451,192 

Cash paid for income taxes 
$—  
$— 

  
    
   

Noncash investing and financing activities: 
    
   

Right of use asset for lease liability 
$47,934  
$— 

Transfer from device parts inventory to fixed assets 
$2,291,421  
$932,805 

Proceeds of fixed asset disposition to loan payable ,
    related party 
$21,000  
$— 

Shares issued for services 
$44,460  
$— 

Deferred compensation 
$538,767  
$— 

Discount applied to face value of loans 
$200,000  
$1,797,645 

Series F warrants issued along with debt 
$1,209,206  
$— 

Exchange of common share warrants for debt 
$—  
$3,000,000 

Refund on abandoned trademarks 
$—  
$1,643 

Penalty shares pursuant to a share purchase agreement 
$—  
$171 

Exercise of warrants 
$—  
$453 

 
The
accompanying notes are an integral part of these consolidated financial statements.
 

F-6
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
1.
GENERAL INFORMATION AND GOING CONCERN
 
Artificial
Intelligence Technology Solutions Inc. (formerly known as On the Move Systems Corp.) (“AITX” or the “Company”)
was incorporated in Florida on March 25, 2010 and reincorporated in Nevada on February 17, 2015. On August 24, 2018, Artificial Intelligence
Technology Solutions Inc., changed its name from On the Move Systems Corp (“OMVS”).
 
Robotic
Assistance Devices, LLC (“RAD”), was incorporated in the State of Nevada on July 26, 2016 as a LLC. On July 25, 2017, Robotic
Assistance Devices LLC converted to a C Corporation, Robotic Assistance Devices, Inc. through the issuance of 10,000 common shares to
its sole shareholder.
 
On
August 28, 2017, AITX completed the acquisition of RAD (the “Acquisition”), whereby AITX acquired all the ownership and equity
interest in RAD for 3,350,000 shares of AITX Series E Preferred Stock and 2,450 shares of Series F Convertible Preferred Stock. AITX’s
prior business focus was transportation services, and AITX was exploring the on-demand logistics market by developing a network of logistics
partnerships. As a result of the closing of the Acquisition, AITX has succeeded to the business of RAD, in which AITX purchased all of
the outstanding shares of capital stock of RAD. As a result, AITX’s business going forward will consist of one segment activity
which is the delivery of artificial intelligence and robotic solutions for operational, security and monitoring needs.
 
The
Acquisition was treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes since
substantially all of AITX’s operations were disposed of as part of the consummation of the transaction. Therefore, no goodwill
or other intangible assets were recorded by AITX as a result of the Acquisition. RAD is treated as the accounting acquirer as its stockholders
control the Company after the Acquisition, even though AITX was the legal acquirer. As a result, the assets and liabilities and the historical
operations that are reflected in these financial statements are those of RAD as if RAD had always been the reporting company.
 
GOING
CONCERN
 
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a
going concern.
 
For
the year ended February 29, 2024, the Company had negative cash flow from operating activities of $12,951,743. As of February 29, 2024
the Company has an accumulated deficit of $132,962,427 and negative working capital of $18,099,085. Management does not anticipate having
positive cash flow from operations in the near future. These factors raise substantial doubt about the Company’s ability to continue
as a going concern for the twelve months following the issuance of these financial statements.
 
The
Company does not have the resources at this time to repay all its credit and debt obligations, make any payments in the form of dividends
to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.
At the same time management points to its successful history with maintaining Company operations and reminds all with reasonable confidence
this will continue. Management has plans to address the Company’s financial situation as follows:
 
Management
is committed to raise either non-dilutive funds or minimally dilutive funds. There is no assurance that these funds will be able to be
raised nor can we provide assurance that these possible raises may not have dilutive effects. In March 2023, the Company entered into
an equity financing agreement whereby an investor will purchase up to $30,000,000 of the Company’s common stock at a discount over
a two-year period. There remains approximately $21 million left to issue under this arrangement.. Management believes that it has the
necessary support to continue operations by continuing its funding methods in the following ways : growing revenues ,through equity proceeds,
and issuing non-convertible debt. Management has had many recent conversations with the Company’s primary debt holder and believes
that the non-convertible debt on the balance sheet will be extended. Management notes that non-convertible debt on the books has been
extended by this debt holder twice in the past and notes that this debt holder has been a strong supporter of the Company.
 

F-7
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
2.
ACCOUNTING POLICIES
 
Basis
of Presentation and Consolidation
 
The
accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States
(“GAAP”) and in conformity with the instructions on Form 10-K of Regulation S-X and the related rules and regulations of
the Securities and Exchange Commission (“SEC”). The audited consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Robotic Assistance Devices, Inc., Robotic Assistance Devices Group , Inc, Robotic Assistance
Devices Mobile , Inc. , On the Move Experience, LLC and OMV Transports, LLC. All significant intercompany accounts and transactions have
been eliminated in consolidation.
 
Use
of Estimates
 
In
order to prepare financial statements in conformity with accounting principals generally accepted in the United States, management must
make estimates , judgements and assumptions that affect the amounts reported in the financial statements and determine whether contingent
assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates
and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements
are based. The most significant estimates included in these consolidated financial statements are those associated with the assumptions
used to value equity instruments used in debt settlements, amendments and extensions.
 
Reclassifications
 
Certain
amounts in the Company’s consolidated financial statements for prior periods have been reclassified to conform to the current period
presentation. These reclassifications have not changed the results of operations of prior periods.
 
Concentrations
 
Loans
payable
 
At
February 29, 2024 there were $32,796,345 of loans payable, $28,540,506 or 87% of these loans to companies controlled by one individual.
At February 28, 2023 there were $31,254,345 of loans payable, $26,540,506 or 85% of these loans to companies controlled by one individual.
 
Cash
 
The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash
equivalents consist of cash on deposit with banks and money market instruments. The Company places its cash and cash equivalents with
high-quality, U.S. financial institutions and, to date has not experienced losses on any of its balances.
 
Accounts
Receivable
 
Accounts
receivable are comprised of balances due from customers, net of estimated allowances for credit losses. In determining collectability,
historical trends are evaluated, and specific customer issues are reviewed on a periodic basis to arrive at appropriate allowances. There
was an allowance of $68,000 and $39,000 provided as of February 29, 2024 and February 28, 2023, respectively. For the year ended February
29, 2024 , three customers account for 72% of total accounts receivable . For the year ended February 28, 2023 , three customers account
for 48% of total accounts receivable.
 
Device
Parts Inventory
 
Device
parts inventory is stated at the lower of cost or net realizable value using the weighted average cost method. The Company records a
valuation reserve for obsolete and slow-moving inventory, relying principally on specific identification of such inventory. The Company
uses these device parts in the assembly of revenue earning devices (and demo devices) as well as research and development. Depending
on use, the Company will transfer the parts to the corresponding asset or expense if used in research and development. A charge to income
is taken when factors that would result in a need for an increase in the valuation, such as excess or obsolete inventory, are noted.
At February 29, 2024 and at February 28, 2023 there was a valuation reserve of $959,000 and $195,000, respectively.
 

F-8
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Revenue
Earning Devices
 
Revenue
earning devices are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful life of 48 months. The
Company continually evaluates revenue earning devices to determine whether events or changes in circumstances have occurred that may
warrant revision of the estimated useful life or whether the devices should be evaluated for possible impairment. The Company uses a
combination of the undiscounted cash flows and market approaches in assessing whether an asset has been impaired. The Company measures
impairment losses based upon the amount by which the carrying amount of the asset exceeds the fair value.
 
Fixed
Assets
 
Fixed
assets are stated at cost. Depreciation is provided on the straight-line method based on the estimated useful lives of the respective
assets which range from three to five years. Major repairs or improvements are capitalized. Minor replacements and maintenance and repairs
which do not improve or extend asset lives are expensed currently.
 
SCHEDULE
OF FIXED ASSETS STATED AT COST


Computer
    equipment
 
3
    years

Furniture
    and fixtures
 
3
    years

Office
    equipment
 
4
    years

Warehouse
    equipment
 
5
    years

Demo
    Devices
 
4
    years

Vehicles
 
3
    years

Leasehold
    improvements
 
5
    years, the life of the lease

 
The
Company periodically evaluates the fair value of fixed assets whenever events or changes in circumstances indicate that its carrying
amounts may not be recoverable. Upon retirement or other disposition of fixed assets, the cost and related accumulated depreciation are
removed from the accounts and the resulting gain or loss, if any, is recognized in income.
 
Research
and Development
 
Research
and development costs are expensed in the period they are incurred in accordance with ASC 730, Research and Development unless
they meet specific criteria related to technical, market and financial feasibility, as determined by Management, including but not limited
to the establishment of a clearly defined future market for the product, and the availability of adequate resources to complete the project.
If all criteria are met, the costs are deferred and amortized over the expected useful life or written off if a product is abandoned.
At February 29, 2024 and February 28, 2023, the Company had no deferred development costs.
 
Contingencies
 
Occasionally,
the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision
for a liability when it believes that it is both probable that a liability has been incurred, and the amount can be reasonably estimated.
If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s consolidated
financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments
about future events and can rely heavily on estimates and assumptions.
 
 

F-9
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Sales
of Future Revenues
 
The
Company has entered into transactions, as more fully described in footnote 10, in which it has received funding from investors in exchange
for which it will make payments to those investors based on the level of sales of certain revenue categories, generally based on a percentage
of sales for those certain revenues. The Company determines whether these agreements constitute sales of future revenues or are in substance
debt based on the facts and circumstances of each agreement, with the following primary criteria determinative of whether the agreement
constitutes a sale of future revenues or debt:
 


 
●
Does
    the agreement purport, in substance, to be a sale

 
 
 

 
●
Does
    the Company have continuing involvement in the generation of cash flows due the investor

 
 
 

 
●
Is
    the transaction cancellable by either party through payment of a lump sum or other transfer of assets

 
 
 

 
●
Is
    the investors rate of return implicitly limited by the terms of the agreement

 
 
 

 
●
Does
    the Company’s revenue for a reporting period underlying the agreement have only a minimal impact on the investor’s rate
    of return

 
 
 

 
●
Does
    the investor have recourse relating to payments due

 
In
the event a transaction is determined to be a sale of future revenues, it is recorded as deferred revenue and amortized using the sum-of-the-revenue
method. In the event a transaction is determined to be debt, it is recorded as debt and amortized using the effective interest method.
As of the date of these financial statements, the Company has determined that all such agreements are debt.
 
Revenue
Recognition
 
ASU
2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and
industry specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers
promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange
for those goods or services. Topic 606 defines a five-step process that must be evaluated and, in doing so, it is possible more judgment
and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted
in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the
amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance
obligation.. For the year ended February 29, 2024 , three customers accounted for 56% of total revenue and for the year ended February
28, 2023 , two customers accounted for 45% of total revenue.
 
Income
Taxes
 
Income
taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income
and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets
arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax
return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset
tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before
the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
 
On
December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires
companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects
of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued
based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance,
and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward
and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial
results, including disclosures, for the Company’s fiscal year ending February 29, 2024, but the Company does not expect the Tax
Act to have a material impact on the Company’s consolidated financial statements.
 
Leases
 
Lease
agreements are evaluated to determine if they are sales/finance leases meeting any of the following criteria at inception: (a) transfer
of ownership of the underlying asset; (b) purchase option that is reasonably certain of being exercised; (c) the lease term is greater
than a major part of the remaining estimated economic life of the underlying asset; or (d) if the present value of the sum of lease payments
and any residual value guaranteed by the lessee that has not already been included in lease payments in accordance with ASC 842-10-30-5(f)
equals or exceeds substantially all of the fair value of the underlying asset.
 

F-10
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
If
at its inception, a lease meets any of the four lease criteria above, the lease is classified by the Company as a sales/finance; and
if none of the four criteria are met, the lease is classified by the Company as an operating lease.
 
Operating
lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term, whereby an equal amount
of rent expense is attributed to each period during the term of the lease, regardless of when actual payments are made. This generally
results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in the
later years. The difference between rent expense recognized and actual rental payments is recorded as deferred rent and included in liabilities.
 
Distinguishing
Liabilities from Equity
 
The
Company relies on the guidance provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain redeemable
and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The
Company will determine the liability classification if the financial instrument is mandatorily redeemable, or if the financial instrument,
other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of
its equity shares.
 
Once
the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial
instrument should be presented between the liability section and the equity section of the balance sheet (“temporary equity”).
The Company will determine temporary equity classification if the redemption of the financial instrument is outside the control of the
Company (i.e. at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.
 
Our
CEO and Chairman holds sufficient shares of the Company’s voting stock that give sufficient voting rights under the articles of
incorporation and bylaws of the Company such that the CEO and Chairman can at any time unilaterally vote to increase the number of authorized
shares of common stock of the Company without the need to call a general meeting of common shareholders of the Company.
 
Initial
Measurement
 
The
Company records its financial instruments classified as liability, temporary equity or permanent equity at issuance at the fair value,
or cash received.
 
Subsequent
Measurement – Financial Instruments Classified as Liabilities
 
The
Company records the fair value of its financial instruments classified as liabilities at each subsequent measurement date. The changes
in fair value of its financial instruments classified as liabilities are recorded as other income (expenses).
 
Fair
Value of Financial Instruments
 
ASC
Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) provides a framework for measuring fair value
in accordance with generally accepted accounting principles.
 
ASC
Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1)
market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable
inputs).
 

F-11
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
The
fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value
hierarchy under ASC Topic 820 are described as follows:
 


 
●
Level
    1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

 
 
 

 
●
Level
    2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
    or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical
    or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset
    or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 
 
 

 
●
Level
    3 – Inputs that are unobservable for the asset or liability.

 
Measured
on a Recurring Basis
 
The
following table presents information about our liabilities measured at fair value on a recurring basis, aggregated by the level in the
fair value hierarchy within which those measurements fell:
SCHEDULE
OF LIABILITIES MEASURED AT FAIR VALUE  


  
Amount at  
Fair Value Measurement Using 

  
Fair Value  
Level 1  
Level 2  
Level 3 

February 29, 2024 
    
    
    
   

Liabilities 
    
    
    
   

Incentive compensation plan payable –
    revaluation of equity awards payable in Series G shares 
$2,500,000  
$—  
$—  
$2,500,000 

  
    
    
    
   

February 28, 2023 
    
    
    
   

Liabilities 
    
    
    
   

Incentive compensation plan payable – revaluation
    of equity awards payable in Series G shares 
$979,000  
$—  
$—  
$979,000 

 
The
Company recorded stock based compensation of $1,521,000 and $499,500 for the years ended February 29, 2024 and February 28, 2023 with
corresponding adjustments to incentive compensation plan payable.
 
The
carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses and advances,
accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments.
 
Earnings
(Loss) per Share
 
Basic
earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common shareholders (numerator)
by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS give effect to all dilutive potential
common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.
In computing diluted EPS, the average stock price for the period is used to determine the number of shares assumed to be purchased from
the exercise of stock options and/or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.
 
Basic
loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share
is computed in a manner similar to the basic loss per share, except the weighted-average number of shares outstanding is increased to
include all common shares, including those with the potential to be issued by virtue of convertible debt and other such convertible instruments.
Diluted loss per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in
nature with regards to earnings per share.
 

F-12
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Recently
Issued Accounting Pronouncements
 
Recently
Issued Accounting Standards Not Yet Adopted
 
In
August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments
with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial
premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured
at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires
the if-converted method to be applied for all convertible instruments. The amendments in ASU 2020-06 are effective for public entities,
excluding smaller reporting companies as defined, for fiscal years beginning after December 15, 2021. For all other entities, the amendments
are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. A reporting entity is not permitted to
adopt the guidance in an interim period, other than the first interim period of its fiscal year. Adoption of the standard requires using
either a modified retrospective or a full retrospective approach. Management is currently evaluating the effect of these provisions on
the Company’s financial position and results of operations

 
3.
REVENUE FROM CONTRACTS WITH CUSTOMERS
 
Revenue
is earned primarily from two sources: 1) direct sales of goods or services and 2) short-term rentals. Direct sales of goods or services
are accounted for under Topic 606, and short-term rentals are accounted for under Topic 842 which was adopted. On March 1, 2019.
 
As
disclosed in the revenue recognition section of Note 2 – Accounting Polices, the Company adopted Topic 606 in accordance with the
effective date on March 1, 2018. Note 2 includes disclosures regarding the Company’s method of adoption and the impact on the Company’s
financial statements. Revenue is recognized on direct sales of goods or services when it transfers promised goods or services to customers
in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.
 

F-13
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Upon
adoption of Topic 842, also referred to above in Note 2, the Company accounts for revenue earned from rental activities where an
identified asset is transferred to the customer and the customer has the ability to control that asset for periods greater than one
year. To date none of the lease agreements entered into have been for periods longer than one year or greater, and the Company has
availed itself of the practical expedient to exclude such leases from ASC 842 accounting and instead has accounted for these leases
under ASC 606.
 
The
following table presents revenues from contracts with customers disaggregated by product/service:
SCHEDULE
OF REVENUES FROM CONTRACTS WITH CUSTOMERS  


  
Year Ended February 29, 2024  
Year Ended February 28, 2023 

Device rental activities 
$1,626,207  
$754,126 

Direct sales of goods and services 
 601,352  
 577,830 

Revenue  
$2,227,559  
$1,331,956 

 
4.
LEASES
 
We
lease certain warehouses, and office space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we
recognize lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed
after the adoption of Topic 842, we did not combine lease and non-lease components.
 
There
is no lease renewal. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is
a transfer of title or purchase option reasonably certain of exercise.
 
Below
is a summary of our lease assets and liabilities at February 29, 2024 and February 28, 2023.
SCHEDULE
OF LEASE ASSETS AND LIABILITIES  


Leases 
Classification 
February 29, 2024  
February 28, 2023 

Assets 
  
    
   

Operating 
Operating Lease Assets 
$1,139,188  
$1,208,440 

Liabilities 
  
    
   

Current 
  
    
   

Operating 
Current Operating Lease Liability 
$237,653  
$248,670 

Noncurrent 
  
    
   

Operating 
Noncurrent Operating Lease Liabilities 
 889,360  
 950,541 

Total lease liabilities 
  
$1,127,013  
$1,199,211 

 
Note:
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate of 10% which for the leases noted above
was based on the information available at commencement date in determining the present value of lease payments. We compare against loans
we obtain to acquire physical assets and not loans we obtain for financing. The loans we obtain for financing are generally at significantly
higher rates and we believe that physical space or vehicle rental agreements are in line with physical asset financing agreements. CAM
charges were not included in operating lease expense and were expensed in general and administrative expenses as incurred.
 
Operating
lease cost and rent was $260,406 and $260,271 for both the twelve months ended February 29, 2024 and February 28, 2023, respectively.
 

F-14
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
5.
INVESTMENT
 
On
December 23, 2022 the Company entered into a Simple Agreement for Future Equity (SAFE) contract to invest $50,000 to acquire shares of
a company’s capital stock at a discount.
 
6.
REVENUE EARNING DEVICES
 
Revenue
earning devices consisted of the following:
REVENUE
EARNING DEVICES CONSISTED OF THE FOLLOWING 


  
February 29, 2024  
February 28, 2023 

Revenue earning devices 
$3,432,846  
$2,015,058 

Less: Accumulated depreciation 
 (952,844) 
 (779,839)

Total 
$2,480,002  
$1,235,219 

 
During
the year ended February 29, 2024, the Company made total additions to revenue earning devices of $2,166,081 which were transferred from
inventory. The Company wrote- off assets with a value 748,243 and related accumulated depreciation $490,295 with a net book value of
$257,948 as a permanent impairment on revenue devices along with finished goods inventory on assets not yet deployed of $326,180 for
a total permanent impairment on revenue earning devices of $584,177. During the year ended February 28, 2023, the Company made total
additions to revenue earning devices of $871,334 which were transferred from inventory. There was no permanent impairment on revenue
earning services for the year ended February 28, 2023.
 
Depreciation
expense for these devices was $681,042 and $345,178 for the years ended February 29, 2024 and February 28, 2023, respectively.
 
7.
FIXED ASSETS
 
Fixed
assets consisted of the following:
SCHEDULE
OF FIXED ASSETS  


  
February 29, 2024  
February 28, 2023 

Automobile 
$74,237  
$101,680 

Demo devices 
 194,352  
 69,010 

Tooling 
 107,020  
 101,322 

Machinery and equipment 
 8,825  
 8,825 

Computer equipment 
 150,387  
 150,387 

Office equipment 
 15,312  
 15,312 

Furniture and fixtures 
 21,225  
 21,225 

Warehouse equipment 
 19,639  
 14,561 

Leasehold improvements 
 26,956  
 15,568 

Fixed assets gross 
 617,953  
 497,890 

Less: Accumulated depreciation 
 (349,878) 
 (182,002)

Fixed assets, net of
    accumulated depreciation  
$268,075  
$315,888 

 
During
the year ended February 29, 2024, the Company made additions to fixed assets of $22,165 and also additions through inventory transfers
of $125,340 and the Company sold a vehicle having a net book value of $4,574 for fair value proceeds of $21,000 and recorded a gain on
disposal of fixed assets of $16,426. The $21,000 proceeds were applied to loan payable -related party.
 
During
the year ended February 28, 2023, the Company made additions to fixed assets of $258,402 and also additions through inventory transfers
of $52,471.
 
Depreciation
expense was $190,747 and $132,937 for the years ended February 29, 2024 and February 28, 2023, respectively.
 

F-15
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
8.
DEFERRED VARIABLE PAYMENT OBLIGATION
 
On
February 1, 2019 the Company entered into an agreement with an investor whereby the investor would pay up to $900,000 in exchange for
a perpetual 9% rate payment (Payments) on the Company’s reported quarterly revenue from operations excluding any gains or losses
from financial instruments (Revenues). At February 29, 2020 the investor has advanced the full $900,000.
 
On
May 9, 2019 the Company entered into two similar arrangements with two investors:
 


 
(1)
The
    investor would pay up to $400,000 in exchange for a perpetual 4% rate Payment on the Company’s reported quarterly Revenues.
    At February 29, 2020, $400,000 has been paid to the Company.

 
 
 

 
(2)
The
    investor would pay up to $50,000 in exchange for a perpetual 1.11% rate Payment on the Company’s reported quarterly Revenues.
    At February 29, 2020, $50,000 has been paid to the Company.

 
These
variable payments (Payments) are to be made 30 days after the end of each fiscal quarter. If the Payments would deplete RAD’s available
cash by more than 30%, the Payments may be deferred for up to 12 months after the quarterly report at an interest rate of 6% per annum
on the unpaid amount.
 
In
the event that at least 10% of the assets of the Company are sold by the Company, the investors would be entitled to the fair market
value (FMV) of all future Payments associated with the assets sold as determined by an independent valuator to be chosen by the investors.
The FMV cannot exceed 30% of the total asset disposition price defined as the total price paid for the assets plus all future Payments
associated with the assets sold. In the event that the common or preferred shares are sold by the Company to a third party as to effect
a change in control, then the investors must be paid the FMV of all future Payments in one lump payment. The FMV cannot exceed 30% of
the share disposition price defined as the total price the third party paid for the shares plus the total value of all future Payments.
 
On
November 18, 2019 the Company entered into another similar arrangement with the (February 1, 2019) investor above whereby the investor
would advance up to $225,000 in exchange for a perpetual 2.25% rate Payment on the Company’s quarterly Revenues (commencing on
quarter ending May 31, 2020). At February 29, 2020 the investor has advanced $109,000 and the investor advanced the $116,000 remainder
as of May 2020.
 
On
December 30, 2019 the Company entered into another similar arrangement with a new investor whereby the investor would advance up to $100,000
in exchange for a perpetual 1.00% rate Payment on the Company’s quarterly Revenues (commencing quarter ended November 30, 2020).
At February 29, 2020 the investor has advanced $50,000 with the remainder to be advanced no later than June 30, 2020. If the total investor
advances turns out to be less than $100,000, this would not constitute a breach of the agreement, rather the 1.00% rate would be adjusted
on a pro-rata basis.
 
On
April 22, 2020 the Company entered into another similar arrangement with the (first May 9, 2019) investor above whereby the investor
would advance up to $100,000 in exchange for a perpetual 1.00% rate Payment on the Company’s quarterly Revenues. At May 31, 2020
the investor has fully funded this commitment.
 
On
July 1, 2020 the Company entered into a similar agreement with the first investor whereby the investor would pay up to $800,000 in exchange
for a perpetual 2.75% rate payment (Payment) on the Company’s reported quarterly revenue. These Payments are to be made 90 days
after the fiscal quarter with the first payment being due no later than May 31, 2021. If the Payments would deplete RAD’s available
cash by more than 20%, the payment may be deferred. The investor had agreed to pay $100,000 per month over an 8 month period with the
first payment due July 2020 and the final payment no later than February 28, 2021. As at August 31, 2020 the investor had fully funded
the $800,000 commitment
 
On
August 27, 2020 the Company and the first investor referred to above consolidated the three separate agreements of February 1, 2019 for
$900,000, November 18, 2019 for $225,000 and July 1, 2020 for $800,000 into a new agreement for a total of $1,925,000. This new agreement
is for similar terms as the above agreements save for the following: the rate payment is revised to 14.25% payable on revenues commencing
the quarter ended August 31, 2020 and the Payments are secured by the assets of the Company. This interest may be secured by UCC filing
but is subordinated to equipment financing on the products the Company leases to its customers.
 

F-16
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
In
summary of all agreements mentioned above if in the event that at least 10% of the assets of the Company are sold by the Company, the
investors would be entitled to the fair market value (FMV) of all future Payments associated with the assets sold as determined by an
independent valuator to be chosen by the investors. The FMV cannot exceed 43.77% of the total asset disposition price defined as the
total price paid for the assets plus all future Payments associated with the assets sold. In the event that the common or preferred shares
are sold by the Company to a third party as to effect a change in control, then the investors must be paid the FMV of all future Payments
in one lump payment. The FMV cannot exceed 43.77% of the share disposition price defined as the total price the third party paid for
the shares plus the total value of all future Payments. As of March 1, 2021 as a result of the amendment with the first investor noted
below. This aggregate asset disposition % was reduced from 43.77 % to 33.77%
 
The
Payments will first become payable on June 30, 2019 (unless otherwise indicated) based on the quarterly Revenues for the quarter ended
May 31, 2019 and will accrue every quarter thereafter. As of February 29, 2024, the Company has accrued approximately $904,377 in Payments,
of which $542,176 is in arrears. As of February 28, 2023, the Company has accrued approximately $542,177 in Payments, of which $325,600
is in arrears. No notices have been received by the Company.
 
On
March 1, 2021 the first investor referred to above whose aggregate investment is $1,925,000 revised his agreements as follows:
 


 
1)
The
    rate payment was reduced from 14.25 % to 9.65 %

 
2)
The
    asset disposition % (see below) was reduced from 31 % to 21%

 
In
consideration for the above changes, the investor received 40 Series F Convertible Preferred Stock and a warrant to purchase 367 shares
of its Series F Convertible Preferred Stock with a five-year term and an exercise price of $1.00. During the three months ended May 31,
2021 the warrant holder exercised warrants to acquire 38 shares of Series F Convertible Preferred Stock. The company attributed a fair
value based on recent transactions for the Series F Preferred stock and warrants of $33,015,214 and recorded a loss on settlement of
debt with a corresponding adjustment to paid in capital.
 
The
Company retains total involvement in the generation of cash flows from these revenue streams that form the basis of the payments to be
made to the investors under this agreement. Because of this, the Company has determined that the agreements constitute debt agreements.
As of February 29, 2024, and February 28, 2023, the long-term balances other than Payments already owed is the cash received of $2,525,000
and $2,525,000, respectively.
 
For
both the years ended February 29, 2024 and February 28, 2023, the Company has received $0 related to the deferred payment obligation
as the balance remains $2,525,000 at both February 28, 2023 and February 28, 2022.
 

F-17
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
9.
RELATED PARTY TRANSACTIONS
 
For
the years ended February 29, 2024 and February 28, 2023, the Company made net repayments of $54,179 and $0, respectively , to its loan
payable-related party. At February 29, 2024, the loan payable-related party was $257,438 and $206,516 at February 28, 2023. As of February
29, 2024, included in the balance due to the related party is $140,013 of deferred salary all of which bears interest at 12%. As of February
28, 2023, included in the balance due to the related party is $108,000 of deferred salary all of which bears interest at 12%. The accrued
interest included at February 29, 2024 was $32,468 (February 28, 2023- $15,660).
 
During
the year ended February 28, 2023 pursuant to the amended Employment Agreement with its Chief Executive Officer the Company accrued $1,521,000
as incentive compensation plan payable with a corresponding recognition of stock based compensation due to the expectation of additional
awards being met. In January 2024 the Company added an Objective 10 which required the accrual of $2,000,000. There was also a net adjustment
reduction of $479,000 for objectives accrued for but not met.
At
February 28, 2023, the balance of incentive compensation plan payable was $979,000. This will be payable in Series G Preferred Shares
which are redeemable at the Company’s option at $1,000 per share.
 
During
the year ended February 29, 2024, the Company accrued $538,767 in deferred compensation for the CEO. This was in accordance with a December
2023 board action allowing for $ 1 million of discretionary compensation. The Company had already recorded $461,233 in bonus compensation.
There was no deferred compensation for the year ended February 28, 2023, the Company recorded a bonus to the CEO of $280,908.
 
During
the years ended February 29, 2024 and February 28, 2023, the Company was charged $2,810,839
and $3,578,981,
respectively in consulting fees for research and development to a company partially owned by a principal shareholder included in
research and development expenses. The principal shareholder received no compensation from this partially owned research and
development company and the fees were spent on core development projects. As at both February 29, 2024 and February 28, 2023 the
balance due to this company was $76,532.
 
10.
OTHER DEBT – VEHICLE LOANS
 
In
December 2016, RAD entered into a vehicle loan for $47,704 secured by the vehicle. The loan is repayable over 5 years maturing November
9, 2021, and repayable $1,019 per month including interest and principal. In November 2017, RAD entered into another vehicle loan secured
by the vehicle for $47,661. The loan is repayable over 5 years, maturing October 24, 2022 and repayable at $923 per month including interest
and principal. The principal repayments made were $0 for both the year ended February 28, 2022 and February 28, 2021. Regarding the second
vehicle loan, the vehicle was returned at the end of fiscal 2019 and the car was subsequently sold by the lender for proceeds of $21,907
which went to reduce the outstanding balance of the loan. A loss of $3,257 was recorded as well. A balance of $21,578 remains on this
vehicle loan at both February 28, 2023 and February 29, 2022. For the first vehicle loan, the vehicle was retired in 2020, the proceeds
of the disposal of $18,766 was applied against the balance of the loan with a $5,515 gain on the remaining asset value of $13,251. A
balance of $16,944 remains on this vehicle loan at both February 28, 2023 and February 28, 2022. The remaining total balances of the
amounts owed on the vehicle loans were $38,522 and $38,522 as of February 29, 2024 and February 28, 2023, respectively, of which all
were classified as current.
 

F-18
Table of Contents 


 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
11.
LOANS PAYABLE
 
Loans
payable at February 29, 2024 consisted of the following:
 SCHEDULE
OF LOANS PAYABLE


  
  
  
  
   
Annual 

Date 
Maturity 
Description 
  
Principal  
Interest Rate 

July
    18, 2016 
July
    18, 2017 
Promissory note 
(1)* 
$3,500  
 22%

December
    10, 2020 
March
    1, 2025 
Promissory note 
(2) 
 3,921,168  
 12%

December
    10, 2020 
March
    1, 2025 
Promissory note 
(3) 
 2,754,338  
 12%

December
    10, 2020 
December
    10, 2024 
Promissory note 
(4) 
 165,605  
 12%

December
    14, 2020 
December
    14, 2023 
Promissory note 
(5)* 
 310,375  
 12%

December
    30, 2020 
March
    1, 2025 
Promissory note 
(6) 
 350,000  
 12%

January
    1, 2021 
March
    1, 2025 
Promissory note 
(7) 
 25,000  
 12%

January
    1, 2021 
March
    1, 2025 
Promissory note 
(8) 
 145,000  
 12%

January
    14, 2021 
March
    1, 2025 
Promissory note 
(9) 
 550,000  
 12%

February
    22, 2021 
March
    1, 2025 
Promissory note 
(10) 
 1,650,000  
 12%

March
    1, 2021 
March
    1, 2024 
Promissory note 
(11) 
 6,000,000  
 12%

June
    8, 2021 
June
    8, 2024 
Promissory note 
(12) 
 2,750,000  
 12%

July
    12, 2021 
July
    26, 2026 
Promissory note 
(13) 
 3,776,360  
 7%

September
    14, 2021 
September
    14, 2024 
Promissory note 
(14) 
 1,650,000  
 12%

July
    28, 2022 
March
    1, 2025 
Promissory note 
(15) 
 170,000  
 15%

August
    30, 2022 
August
    30,2024 
Promissory note 
(16) 
 3,000,000  
 15%

September
    7, 2022 
March
    1, 2025 
Promissory note 
(17) 
 400,000  
 15%

September
    8, 2022 
March
    1, 2025 
Promissory note 
(18) 
 475,000  
 15%

October
    13, 2022 
March
    1, 2025 
Promissory note 
(19) 
 350,000  
 15%

October
    28, 2022 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

November
    9, 2022 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

November
    10, 2022 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

November
    15, 2022 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

January
    11, 2023 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

February
    6, 2023 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

April
    5. 2023 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

April
    20, 23 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

May
    11, 2023 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

October
    27, 2023 
October
    31, 2026 
Promissory note 
(20) 
 400,000  
 15%

November
    30, 2023 
October
    31, 2025 
Purchase Agreement 
(21) 
 350,000  
 35%

  
  
  
  
$32,796,346  
   

  
  
  
  
    
   

Less: current portion of loans payable 
  
 (13,879,479) 
   

Less: discount on non-current loans payable 
  
 (4,118,334) 
   

Non-current loans payable, net of discount 
  
$14,798,532  
   

  
  
  
  
    
   

Current portion of loans payable 
  
$13,879,479  
   

Less: discount on current portion of loans payable 
  
 (688,597) 
   

Current portion of loans payable, net of discount 
  
$13,190,882  
   

 


 
*
In default

 

F-19
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 


(1)
This
    note was transferred from convertible notes payable because in August 2022 it was no longer convertible due to restrictions placed
    on the lender.

 
 

(2)
This
    promissory note was issued as part of a debt settlement whereby $2,683,357 in convertible notes and associated accrued interest of
    $1,237,811 totaling $3,921,168 was exchanged for this promissory note of $3,921,168, and a warrant to purchase 450,000,000 shares
    at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $990,000. This note is secured
    by a general security charging all of the Company’s present and after-acquired property. On November 28, 2023, the parties
    extended the maturity date from December 10, 2023 to March 1, 2025 with all other terms and conditions remaining the same.

 
 

(3)
This
    promissory note was issued as part of a debt settlement whereby $1,460,794 in convertible notes and associated accrued interest of
    $1,593,544 totaling $3,054,338 was exchanged for this promissory note of $3,054,338, and a warrant to purchase 250,000,000 shares
    at an exercise price of $.002 per share and a three-year maturity having a relative fair value of $550,000. This note is secured
    by a general security charging all of the Company’s present and after-acquired property. $100,000 and $300,000 has been repaid
    the three and nine months ended November 30, 2023. The balance at November 30,2023 is now $2,754,338. On November 28, 2023, the parties
    extended the maturity date from December 10, 2023 to March 1, 2025 with all other terms and conditions remaining the same.

 
 

(4)
This
    promissory note was issued as part of a debt settlement whereby $103,180 in convertible notes and associated accrued interest of
    $62,425 totaling $165,605 was exchanged for this promissory note of $165,605, and a warrant to purchase 80,000,000 shares at an exercise
    price of $.002 per share and a three-year maturity having a fair value of $176,000.

 
 

(5)
This
    promissory note was issued as part of a debt settlement whereby $235,000 in convertible notes and associated accrued interest of
    $75,375 totaling $310,375 was exchanged for this promissory note of $310,375, and a warrant to purchase 25,000,000 shares at an exercise
    price of $.002 per share and a three-year maturity having a fair value of $182,500. The loan is presently in default and the Company
    is working on a extension with the lender. 

 
 

(6)
The
    note, with an original principal amount of $350,000, may be pre-payable at any time. The note balance includes an original issue
    discount of $35,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a 3-year
    term and having a relative fair value of $271,250. The discounts are being amortized over the term of the loan. After allocating
    these charges to debt and equity according to their respective values, a debt discount of $271,250 with a corresponding adjustment
    to paid in capital for the relative fair value of the warrant. For the year ended February 29, 2024, the Company recorded amortization
    expense of $120,023, with an unamortized discount of $73,491 at February 29, 2024. On November 28, 2023, the parties extended the
    maturity date from December 10, 2023 to March 1, 2025 with all other terms and conditions remaining the same.

 
 

(7)
This
    promissory note was issued as part of a debt settlement whereby $9,200 in convertible notes and associated accrued interest of $6,944
    totaling $16,144 was exchanged for this promissory note of $25,000. This note is secured by a general security charging all of the
    Company’s present and after-acquired property. On November 28, 2023, the parties extended the maturity date from January 1,
    2024 to March 1, 2025 with all other terms and conditions remaining the same.

 
 

(8)
This
    promissory note was issued as part of a debt settlement whereby $79,500 in convertible notes and associated accrued interest of $28,925
    totaling $108,425 was exchanged for this promissory note of $145,000. This note is secured by a general security charging all of
    the Company’s present and after-acquired property. On November 28, 2023, the parties extended the maturity date from January
    1, 2024 to March 1, 2025 with all other terms and conditions remaining the same.

 
 

(9)
The
    note, with an original principal amount of $550,000, may be pre-payable at any time. The note balance includes an original issue
    discount of $250,000 and was issued with a warrant to purchase 50,000,000 shares at an exercise price of $0.025 per share with a
    3-year term and having a relative fair value of $380,174. The discounts are being amortized over the term of the loan. After allocating
    these charges to debt and equity according to their respective values, a debt discount of $380,174 with a corresponding adjustment
    to paid in capital. For the year ended February 29, 2024, the Company recorded amortization expense of $148,493, with an unamortized
    discount of $90,443 at February 29, 2024. On November 28, 2023, the parties extended the maturity date from January 14, 2024 to March
    1, 2025 with all other terms and conditions remaining the same.

 

F-20
Table of Contents 

 

ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 


(10)
The
    note, with an original principal balance of $1,650,000, may be pre-payable at any time. The note balance includes an original issue
    discount of $150,000 and was issued with a warrant to purchase 100,000,000 shares at an exercise price of $0.135 per share with a
    3-year term and having a relative fair value of $1,342,857. The discount and warrant are being amortized over the term of the loan.
    After allocating these charges to debt and equity according to their respective values, a debt discount of $1,342,857 with a corresponding
    adjustment to paid in capital for the relative fair value of the warrant. The maturity date was extended from February 22, 2022 to
    February 22, 2024 on February 28, 2022 in exchange for warrants to purchase 50,000,000 at an exercise price of $.0164 and a 3-year
    term. These warrants have a fair value of $950,000 recorded as interest expense with a corresponding adjustment to paid in capital
    recorded in the year ended February 28, 2022. For the year ended February 29, 2024, the Company recorded amortization expense of
    $559,061, with an unamortized discount of $553,199 at February 29, 2024. On November 28, 2023, the parties extended the maturity
    date from February 22, 2024 to March 1, 2025 with all other terms and conditions remaining the same.

 
 

(11)
The
    unsecured note may be pre-payable at any time. Cash proceeds of $5,400,000 were received. The note balance of $6,000,000 includes
    an original issue discount of $600,000 and was issued with a warrant to purchase 300,000,000 shares at an exercise price of $0.135
    per share with a 3-year term and having a relative fair value of $4,749,005 using Black-Scholes with assumptions described in note
    13. The discounts are being amortized over the term of the loan. After allocating these charges to debt and equity according to their
    respective values, a debt discount of $4,749,005 with a corresponding adjustment to paid in capital for the relative value of the
    warrant.. The maturity was extended from March 1, 2022 to March 1, 2024 on February 28, 2022 in exchange for warrants to purchase
    150,000,000 shares of common stock at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $2,850,000
    recorded as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022. This
    note has been fully amortized.

 
 

(12)
The
    note, with an original principal balance of $2,750,000, may be pre-payable at any time. The note balance includes an original issue
    discount of $50,000 and was issued with a warrant to purchase 170,000,000 shares at an exercise price of $0.064 per share with a
    3-year term and having a relative fair value of $2,035,033. The discounts are being amortized over the term of the loan. After allocating
    these charges to debt and equity according to their respective values, a debt discount of $2,035,033 with a corresponding adjustment
    to paid in capital. The maturity date was extended from June 8, 2022 to June 8, 2024 on February 28, 2022 in exchange for warrants
    to purchase 85,000,000 at an exercise price of $.0164 and a 3 year term. These warrants have a fair value of $1,615,000 recorded
    as interest expense with a corresponding adjustment to paid in capital recorded in the year ended February 28, 2022. For the year
    ended February 29, 2024, the Company recorded amortization expense of $756,550, with an unamortized discount of $37,668 at February
    29, 2024. 

 
 

(13)
This
    loan, with an original principal balance of $4,000,160, was in exchange for 184 Series F preferred shares from a former director.
    The interest and principal are payable at maturity. The loan is unsecured. For the year ended February 29, 2024 there were repayments
    of $108,000 on the note.

 
 

(14)
The
    note, with an original principal balance of $1,650,000, may be pre-payable at any time. The note balance includes an original issue
    discount of $150,000 and was issued with a warrant to purchase 250,000,000 shares at an exercise price of $0.037 per share with a
    3-year term and having a relative fair value of $1,284,783, The discounts are being amortized over the term of the loan. After allocating
    these charges to debt and equity according to their respective values, a debt discount of $1,284,783 with a corresponding adjustment
    to paid in capital. For the year ended February 29, 2024, the Company recorded amortization expense of $575,036, with an unamortized
    discount of $639,395 at February 29, 2024. 

 
 

(15)
Original
    $170,000 note may be pre-payable at any time. The note balance includes an original issue discount of $20,000. Principal and interest
    due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the year ended
    February 29, 2024, the Company recorded amortization expense of $9,026, with an unamortized discount of $0 at February 29, 2024.
    On November 29, 2023, the parties extended the maturity date from July 28, 2023 to March 1, 2025 with all other terms and conditions
    remaining the same.

 

F-21
Table of Contents 


 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 


(16)
A
    warrant holder exchanged 955,000,000 warrants for a promissory note of $3,000,000, bearing interest at 15% with a two year maturity.
    The fair value of the warrants was determined to be $2,960,500 with a corresponding adjustment to paid-in capital and a debt discount
    of $39,500 which will be amortized over the term of the loan. Principal and interest due at maturity. For the year ended February
    29, 2024, the Company recorded amortization expense of $19,333, with an unamortized discount of $11,535 at February 29, 2024. 

 
 

(17)
Original
    $400,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Principal and interest
    due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the year ended
    February 29, 2024, the Company recorded amortization expense of $27,821, with an unamortized discount of $0 at February 29, 2024.
    On November 29, 2023, the parties extended the maturity date from September 7, 2023 to March 1, 2025 with all other terms and conditions
    remaining the same.

 
 

(18)
Original
    $475,000 note may be pre-payable at any time. The note balance includes an original issue discount of $75,000. Principal and interest
    due at maturity. Secured by a general security charging all of RAD’s present and after-acquired property. For the year ended
    February 29, 2024, the Company recorded amortization expense of $36,739, with an unamortized discount of $0 at February 29, 2024.
    On November 29, 2023, the parties extended the maturity date from September 8, 2023 to March 1, 2025 with all other terms and conditions
    remaining the same.

 
 

(19)
Original
    $350,000 note may be pre-payable at any time. The note balance includes an original issue discount of $50,000. Principal and interest
    due at maturity. Secured by a general security charging all of the Company’s s present and after-acquired property. For the
    year ended February 29, 2024, the Company recorded amortization expense of $32,910, with an unamortized discount of $0 at February
    29, 2024. On November 29, 2023, the parties extended the maturity date from October 13, 2023 to March 1, 2025 with all other terms
    and conditions remaining the same.

 
 

(20)
On
    October 28, 2022 the Company entered into an loan facility with a lender for up to $4,000,000 including an original issue discount
    of $500,000. In exchange the Company will issue one series F Preferred Share, extended 329 series F warrants with a March 1, 2026
    maturity to a new October 31, 2033 maturity, and issue up to 10 tranches with each tranche of $400,000, with cash proceeds of $350,000
    an original issue discount of $50,000, October 31, 2026 maturity, and 61 Series F warrants with a October 31, 2033 maturity. Secured
    by a general security charging all of the Company’s present and after-acquired property. At February 29, 2024 the Company has
    issued all 10 tranches totaling $ 4,000,000 as follows: 

 
October
28, 2022, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants and 1 Series F Preferred Share having
a relative fair value of $299,399. For the year ended February 29, 2024, the Company recorded amortization expense of $11,950, with an
unamortized discount of $336,074 at February 29, 2024.
 
November
9, 2022, $400,000 loan, original issue discount of $50,000 , 61 Series F Preferred Share warrants having a relative fair value of $299,750.
For the year ended February 29, 2024, the Company recorded amortization expense of $11,799, with an unamortized discount of $336,639
at February 29, 2024.

November
10, 2022, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $302,020.
For the year ended February 29, 2024, the Company recorded amortization expense of $10,897, with an unamortized discount of $339,984
at February 29, 2024.
 
November
15, 2022, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $299,959.
For the year ended February 29, 2024, the Company recorded amortization expense of $12,025, with an unamortized discount of $335,790
at February 29, 2024.
 
January
11, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $299,959.
For the year ended February 29, 2024, the Company recorded amortization expense of $12,252, with an unamortized discount of $334,937
at February 29, 2024.

February
6, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $299,959.
For the year ended February 29, 2024, the Company recorded amortization expense of $11,790, with an unamortized discount of $336,636
at February 29, 2024.

April
5, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $296,245.
For the year ended February 29, 2024, the Company recorded amortization expense of $11,015, with an unamortized discount of $335,230
at February 29, 2024.
 

F-22
Table of Contents 


 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
April
20, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $302,219.
For the year ended February 29, 2024, the Company recorded amortization expense of $8,618, with an unamortized discount of $343,601 at
February 29, 2024.
 
May
11, 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $348,983.
For the year ended February 29, 2024, the Company recorded amortization expense of $174, with an unamortized discount of $398,809 at
February 29, 2024.
 
October
27 2023, $400,000 loan, original issue discount of $50,000, 61 Series F Preferred Share warrants having a relative fair value of $261,759.
For the year ended February 29, 2024, the Company recorded amortization expense of $8,661, with an unamortized discount of $303,098 at
February 29, 2024.
 


(21)
On
    November 30, 2023, the Company entered into an agreement where the lender will buy pay the Company $350,000 in exchange for thirteen
    future monthly payments of $36,750 commencing on April 30,2024 through to April 30, 2025 totaling $477,750. The effective interest
    rate is 35% per annum. As the proceeds were received on December 1, 2023 , this loan was recorded on December 1, 2023. Secured by
    a general security charging all of RAD’s present and after-acquired property. Default rate of 15% per annum calculated daily
    on any missed monthly payment.

 

 
12.
STOCKHOLDERS’ DEFICIT
 
Preferred
Stock: The Company is authorized to issue up to 20,000,000 shares of $0.001 par value preferred stock. The board of directors is
authorized to designate any series of preferred stock up to the total authorized number of shares.
 
Series
B Convertible, Redeemable Preferred Stock
 
The
board of directors has designated 5,000 shares of Series B Convertible, Redeemable Preferred Stock with a par value of $0.001 per share.
As of the date of this report, there are no shares of Series B Preferred Stock outstanding. The Series B Convertible Preferred Stock
are redeemable at $1,200 per share, rank in priority to common stock and common stock equivalents upon liquidation of the Company, have
voting rights on a converted basis and receives quarterly dividends of 8%. Each holder may, at any time and from time to time convert
all, but not less than all, of their shares of Series B Convertible, Redeemable Preferred Stock into a number of fully paid and nonassessable
shares of common stock determined by dividing the redemption value by the Conversion Price. The Conversion price is equal to the lower
of (1) a fixed price equaling the closing bid price of the Common Stock on the trading day immediately preceding the date of the acquisition
of the shares and (2) the lowest traded price of the Common Stock during the ten (10) calendar days immediately preceding, but not including,
the Conversion Date. Following an event of default,” as defined in the Purchase Agreement, the Conversion price shall equal the
lower of: (a) the then applicable Conversion Price; or (b) a price per share equaling eighty five percent (85%) of the lowest traded
price for the Company’s common stock during the fifteen (15) Trading Days immediately preceding, but not including, the Conversion
Date. Each share of Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends of eight percent
(8%) per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Preferred Share
has been converted or redeemed. Dividends may be paid in cash or in shares of Preferred Stock at the discretion of the Company. Any dividends
that are not paid a shall continue to accrue and shall entail a late fee, which must be paid in cash, at the rate of 14% per annum or
the lesser rate permitted by applicable law which shall accrue and compound daily from the dividend payment date through and including
the date of actual payment in full. On the thirtieth day following the issue date of this Preferred Stock the Company shall have the
obligation to redeem one-third of the Preferred Stock outstanding for a redemption price equal to the redemption value of each such share
of Preferred Stock, plus any accrued but unpaid dividends, plus all other amounts due to the Holder including, but not limited to Late
Fees, liquidated damages and the legal fees and expenses of the Holder’s counsel. On the sixtieth (60th) calendar day
following the date Preferred Stock is issued, the Corporation shall have the obligation to redeem one-half of the Preferred Stock then
outstanding for the redemption price. On the ninetieth (90th) calendar day following the date Preferred Stock is issued, the
Corporation shall have the obligation to redeem all of the Preferred Stock then outstanding for the redemption price. From the date of
issuance until the date no shares of Series B Preferred Stock are issued and outstanding, unless Holders of at least 75% in Stated Value
of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and shall
not permit any of the Subsidiaries to, directly or indirectly: (a) other than Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect
to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (b) other
than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; (c) amend its charter documents,
including, without limitation, its articles of incorporation and bylaws, in any manner that materially and adversely affects any rights
of the Holder; (d)
repay, repurchase or offer to repay, repurchase or otherwise acquire of any shares of its Common Stock, Common Stock Equivalents or Junior
Securities, other than as to the Conversion Shares as permitted or required under the Transaction Documents: (e) pay cash dividends or
distributions on Junior Securities of the Corporation; f) enter into any transaction with any Affiliate of the Corporation which would
be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis
and expressly approved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise required
for board approval); or(g) enter into any agreement with respect to any of the foregoing.
 

F-23
Table of Contents 


 ARTIFICIAL
                                            INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Series
E Preferred Stock
 
The
board of directors has designated 4,350,000 shares of Series E Preferred Stock. As of the date of this report, there are 3,350,000 shares
of Series E Preferred Stock outstanding. The Series E Preferred Stock ranks subordinate to the Company’s common stock as to distributions
of assets upon liquidation, dissolution or winding up of the Corporation. The Series E preferred stock is non-redeemable, does not have
rights upon liquidation of the Company and does not receive dividends. The outstanding shares of Series E Preferred Stock have the right
to take action by written consent or vote based on the number of votes equal to twice the number of votes of all outstanding shares of
equity instruments with voting rights. As a result, the holder of Series E Preferred Stock has 2/3rds of the voting power of all shareholders
at any time corporate action requires a vote of shareholders.
 
Series
F Convertible Preferred Stock
 
The
board of directors has designated 4,350 shares of Series F Convertible Preferred Stock with a par value of $1.00 per share. As of the
date of this report, there are 2,533 shares of Series F Convertible Preferred Stock outstanding. The Series F Convertible Preferred Stock
is non-redeemable, does not have rights upon liquidation of the Company, does not have voting rights and does not receive dividends.
Each holder may, at any time and from time to time convert all, but not less than all, of their shares of Series F Convertible Preferred
Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding
shares of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis. So long as any shares
of Series F Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval of the majority
of the holders: (a) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely
the Series F convertible preferred stock; (b) create any Senior Securities; (c) create any pari passu Securities; (d) do any act or thing
not authorized or contemplated by the Certificate of Designation which would result in any taxation with respect to the Series F Convertible
Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended, (or otherwise suffer to exist any such taxation as a result thereof).
 
Series
G Preferred Stock
 
The
board of directors has designated 100,000 shares of Series G Preferred Stock. As of the date of this report, there are no shares of Series
G Preferred Stock outstanding. The series G shares are redeemable at $1,000 per share The Series G preferred stock does not have voting
rights, does not have rights upon liquidation of the Company and does not receive dividends.
 
Summary
of Preferred Stock Activity
 

F-24
Table of Contents 


 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Series
B Convertible, Redeemable Preferred Stock
 
On
April 27, 2024, in connection with a Share Purchase Agreement the Company created a new class Of Series B Convertible Redeemable with
5,000 authorized shares.
 
Series
F Convertible Preferred Stock
 
Each
holder of Series F Convertible Preferred Shares may, at any time and from time to time convert all, but not less than all, of their shares
into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares
of common stock of the Company on the date of conversion by three and 45 100ths (3.45) on a pro rata basis.
 
On
August 23, 2021, the Company filed amended Series F preferred shares such that Series F preferred shares are not convertible into common
stock by a holder until (A) August 23, 2023 or (B) the date on which such a conversion may be required for the purpose of (i) uplisting
the Company to a new stock exchange, or (ii) selling more than 50% of the Company’s assets. On April 30, 2024 the Company increased
authorized to 10,000 Series F Preferred Shares.
 
Summary
or Preferred Stock Activity
 
During
the year ended February 29, 2024 Series F shareholders had the following activity:
 


 
—
A
    total of 244 Series F Preferred Stock Warrants issued along with debt to a lender.

 
During
the year ended February 28, 2023 Series F shareholders had the following activity:
 


 
—
1
    Series F Preferred Share and a total of 366 Series F Preferred Stock Warrants issued along with debt to a lender.

 
Unissued
Series F Preferred Stock
 
At
both February 29, 2024 and February 28, 2023 there remains 46 issuable Series F preferred stock at a value of $99,086.
 
On
October 28, 2022 as part of a $4,000,000 loan facility (described in Note 11) the Company extended the maturity date of the 329 existing
Series F Preferred Warrants currently held by the lender to October 31, 2033 from October 31, 2026.
 
Summary
of Preferred Stock Warrant Activity
 SUMMARY
OF PREFERRED STOCK WARRANT ACTIVITY


  
Number of Series F Preferred Warrants  
Weighted Average Exercise Price  
Weighted Average Remaining Years 

Outstanding at March 1, 2023 
 695  
$1.00  
 10.00 

Issued 
 244  
$1.00  
 10.00 

Exercised 
 —  
 —  
 — 

Forfeited and cancelled 
 —  
 —  
 — 

Outstanding at February 29, 2024 
 939  
$1.00  
 9.5 

 


F-25
Table of Contents 

 

ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Summary
of Common Stock Activity
 
The
Company increased authorized common shares from 5,000,000,000 to 6,000,000,000 on July 8, 2022, from 6,000,000,000 to 7,225,000,000 on
March 19, 2023 from 7,225,000,000 to 10,000,000,000 on August 30, 2023, and from 10,000,000,000 to 12,500,000,000 on March 22, 2024.
 
Summary
of Common Stock Activity
 
During
the year ended, February 29, 2024, common shareholders had the following activity:
 


 
—
the
    Company issued 3,383,509,359 common shares with gross proceeds of $8,21,027 and net proceeds of $11,282,955 after issuance costs
    of $457,060.

 
 
 

 
—
the
    Company issued 6,500,000 common shares for services with a fair value of $44,460. 

 
During
the year ended, February 28, 2023, common shareholders had the following activity:
 


 
—
the
    Company issued 1,057,841,576 common shares with gross proceeds of $8,21,027 and net proceeds of $7,771,169 after issuance costs of
    $447,858.

 
 
 

 
—
the
    Company issued 17,500,000 common shares as penalty to an investor pursuant to a share purchase agreement. 

 
 
 

 
—
the
    Company issued 45,306,557 shares through the cashless exercise of 108,378,210 warrants.

 
 
 

 
—
the
    Company cancelled 17,116,894 shares as a result of an SEC enforcement action against a lender and issued 10,000,000 shares for $118,500
    as payment for services.

 
The
table below represent the common shares issued, issuable and outstanding at February 29, 2024 and February 28, 2023:
 
 SUMMARY
OF COMMON SHARES ISSUED, ISSUABLE AND OUTSTANDING


Common shares 
February 29, 2024  
February 28, 2023 

Issued 
 9,238,750,958  
 5,836,641,599 

Issuable 
 —  
 12,100,000 

Issued, issuable and outstanding 
 9,238,750,958  
 5,848,741,599 

 

F-26
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Summary
of Warrant and Stock Option Activity
SUMMARY
OF WARRANT AND STOCK OPTION ACTIVITY 


  
Number of Warrants  
Weighted Average Exercise
    Price  
Weighted Average Remaining
    Years 

Outstanding at February 29, 2022 
 1,216,845,661  
$0.06  
 2.38 

Adjusted(1) 
 66,750,000  
 0.011  
 1.41 

Issued 
 94,000,000  
 0.01  
 4.69 

Exercised 
 (108,378,210) 
 (0.011) 
 2.44 

Forfeited and cancelled 
 (955,000,000) 
 (0.008) 
 1.33 

Outstanding at February 28, 2023 
 314,217,451  
$0.114  
 1.95 

Issued 
 —  
 —  
 — 

Exercised 
 —  
 —  
 — 

Forfeited and cancelled 
 (13,621,790) 
 (0.01) 
 — 

Outstanding at February 29, 2024 
 300,595,661  
$0.003  
 1.00 

 


(1)Required dilution
adjustment per warrant agreement


 
For
the years ended February 29, 2024 and February 28, 2023, the Company recorded a total of $0 and $0, respectively on stock-based payments
for warrants with a corresponding adjustment to additional paid-in capital.
 
For
the years ended February 29, 2024 and February 28, 2022 the Company recorded a total of $272,559 and $240,550 respectively, to stock-based
compensation for options and shares with a corresponding adjustment to additional paid-in capital. In addition the Company recorded other
stock based compensation of ($479,000) and $499,500, respectively with a corresponding adjustment to incentive compensation plan payable,
payable in Series G Preferred shares which have not yet been issued.
 
During
the year ended February 29, 2024 warrant holders had the following activity:
 


 
—
On
    January 27, 2024 warrants to acquire 13,621,790 shares expired. 

 
During
the year ended February 28, 2023 warrant holders had the following activity:
 


 
—
On
    August 30, 2022 a warrant holder exchanged 955,000,000 warrants for a promissory note of $3,000,000, bearing interest at 15% with
    a two year maturity. The fair value of the warrants was determined to be 2,960,500 with a corresponding adjustment to paid-in capital
    and a debt discount of $39,500 which will be amortized over the term of the loan.

 
 
 

 
—
On
    August 9, 2022 as part of a debt issuance the Company issued two 47,000,000 warrants at an exercise price of $0.01 and $0.008 per
    share, respectively both with a 5-year term and with a total relative fair value of $393,949 all using a Monte Carlo simulation to
    include reset events, exercise at maturity, and cashless exercise features with assumptions described below:

SCHEDULE
OF FAIR VALUE ASSUMPTIONS OF WARRANTS 


Strike price 
$0.008
                                       - $0.01 

Fair value of Company’s common stock 
$0.012 

Dividend yield 
                     0.00%

Expected volatility 
 88.2%
                                            - 90.00% 

Risk free interest rate 
 2.98%

Expected term (years) 
 5.00 

 


 
—
Cashless
    exercise of 108,378,210 warrants for 45,306,557 common shares

 

F-27
Table of Contents 

 

ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Summary
of Common Stock Option Activity
 
Summary
of CEO Compensation Grant
 
On
April 9, 2021 the Company entered into an Employment Agreement with Chief Executive Officer, Steven Reinharz with a three- year term
under the following terms whereby stock option awards will be granted if certain conditions are met:
 


 
—
A
    stock option award (option 1) will be granted to the employee to purchase 10,000,000 shares at an exercise price of $ $0.15 per share
    if the trading share price of the Company reaches an average of $0.30 per share for ten days over a 30 day trading period.

 
 
 

 
—
A
    stock option award (option 2) will be granted to the employee to purchase 30,000,000 shares at an exercise price of $ $0.25 per share
    if the trading share price of the Company reaches an average of $0.50 per share for ten days over a 30 day trading period.

 


Objective
    #3:
 
Sales
    in any fiscal quarter exceed the total sales in fiscal year 2021 for the first time.

 
 
 

Award
    #3:
 
Five
    hundred (500) shares of Series G preferred stock.

 
 
 

Objective
    #4:
 
One
    hundred fifty (150) devices are deployed in the marketplace.

 
 
 

Award
    #4:
 
Two
    hundred fifty (250) shares of Series G preferred stock.

 
 
 

Objective
    #5:
 
Year-to-date
    sales at any point in fiscal year 2022 exceed One Million Dollars ($1,000,000).

 
 
 

Award
    #5:
 
Two
    hundred fifty (250) shares of Series G preferred stock.

 
 
 

Objective
    #6:
 
The
    price per share of common stock has increased to and maintains a price of Ten Cents ($0.10) or more for ten (10) days in a thirty
    (30) day period.

 
 
 

Award
    #6:
 
Two
    hundred fifty (250) shares of Series G preferred stock.

 
 
 

Objective
    #7:
 
The
    price per share of common stock has increased to and maintains a price of Twenty Cents ($0.20) or more for ten (10) days in a thirty
    (30) day period.

 
 
 

Award
    #7:
 
Five
    hundred (500) shares of Series G preferred stock.

 
 
 

Objective
    #8:
 
The
    RAD 3.0 products are launched into the marketplace by November 30, 2021.

 
 
 

Award
    #8:
 
Five
    hundred (500) shares of Series G preferred stock.

 
 
 

Objective
    #9:
 
RAD
    receives an order for fifty (50) units from a single customer.

 
 
 

Award
    #9:
 
Five
    hundred (500) shares of Series G preferred stock.

 
On
January 31, 2024 the Company added the following Objective effective Martch 1, 2022:
 


Objective # 10
 
In any fiscal quarter,
  attrition , measured by loss of recurring monthly revenue does not exceed 10%

 
 
 

Award #10
 
Two hundred fifty
  (250) shares of Series G preferred stock.


 




The
fair value of the first two awards was obtained through the use of the Monte Carlo method was $69,350 with a charge to stock- based compensation
and a corresponding charge to paid in capital. The fair value of the remaining rewards was determined by calculating the vesting amounts
of each reward and then determining for each reporting period the requisite service rendered and applying that against the cash redemption
value of the number of shares of Series G issuable for each tier in the agreement. For the period ended February 29, 2024 that amount
totaled $1,521,000 with a charge to stock-based compensation and a corresponding charge to incentive compensation plan payable. For the
period ended February 28, 2023 that amount totaled $499,500 with a charge to stock-based compensation and a corresponding charge to incentive
compensation plan payable.
 

F-28
Table of Contents 

 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
On
April 14, 2021, the Shareholders of Series E Preferred Stock and the Board of Directors of our Company (“Board”) approved
and adopted the 2021 Incentive Stock Plan (the “2021 Plan”). On August 11, 2022 the Company amended the 2021 Plan increasing
the maximum number of shares applicable to the 2021 Plan from 5,000,000 to 100,000,000. On August 14, 2023 the Company further amended
the plan increasing the maximum shares to 200,000,000.
 
The
purpose of the 2021 Plan is to promote the success of the Company by authorizing incentive awards to retain Directors, executives, selected
Employees and Consultants, and reward participants for making major contributions to the success of the Company. The 2021 Plan authorizes
the granting of stock options, restricted stock, restricted stock units, stock appreciation rights and stock awards. A total of two hundred
million (200,000,000) shares of common stock may be issued under the 2021 Plan. All awards under the 2021 Plan, whether vested or unvested,
are subject to the terms of any recoupment, clawback or similar policy of the Company in effect from time to time, as well as any similar
provisions of applicable law, which could in certain circumstances require repayment or forfeiture of awards or any shares of stock or
other cash or property received with respect to the awards, including any value received from a disposition of the shares acquired upon
payment of the awards. The 2021 Plan will be administered by the Board or any Committee authorized by the Board, if applicable, which
will have the sole authority to, among other things: construe and interpret the 2021 Plan; make rules and regulations relating to the
administration of the 2021 Plan; select participants; and establish the terms and conditions of awards, all in accordance with the terms
of the 2021 Plan. The 2021 Plan will remain in effect until April 14, 2031, unless sooner terminated by the Board. Termination will not
affect awards then outstanding.
 
During
the year ended February 29, 2024 the Company had the following common stock option activity:
 


 
—
On
    September 1, 2023, the Company as an addition to the afore-mentioned Incentive Stock Option Plan issued 114,217,035 shares to 48
    employees. The shares were issued with an exercise price of $0.02, vest after 4 years with a 5 year term having a fair value of $593,929
    using the Black-Scholes model with assumptions described below:

 SCHEDULE
OF COMMON STOCK OPTION ACTIVITY ASSUMPTIONS


Strike price 
$0.02 

Fair value of Company’s common stock 
$0.0052 

Dividend yield 
 0.00%

Expected volatility 
 320.5 

Risk free interest rate 
 4.29%

Expected term (years) 
 4.50 

 
The
Company recorded $74,241 in stock-based compensation on the 2023 plan which represents the current expense over the vesting period. In
addition the company recorded $198,357 stock based compensation on the 2022 options , so for the year ended February 29, 2024 the Company
recorded a total of $272,599 in stock based compensation with a corresponding increase in paid up capital.
 


 
—
On
    the original 2021 plan, options to purchase 21,275,000 shares were forfeited due to employee terminations

 
During
the year ended February 28, 2023 the Company had the following common stock option activity:
 


 
—
On
    September 1, 2022, the Company as part of the afore-mentioned Incentive Stock Option Plan issued 100,000,000 shares to 64 employees.
    The shares were issued with an exercise price of $0.02, vest after 4 years with a 5 year term having a fair value of $1,020,000 using
    the Black-Scholes model with assumptions described below:

 
 SCHEDULE
OF COMMON STOCK OPTION ACTIVITY ASSUMPTIONS


Strike price 
$0.02 

Fair value of Company’s common stock 
$0.01 

Dividend yield 
 0.00%

Expected volatility 
 340.9 

Risk free interest rate 
 3.39%

Expected term (years) 
 4.50 

 
The
Company recorded $122,050 in stock-based compensation which represents the current expense over the vesting period.
 


 
—
Options
    to purchase 4,275,000 shares were forfeited due to employee terminations

 

F-29
Table of Contents 

 

ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Summary
of Common Stock Option Activity
 SUMMARY OF COMMON STOCK OPTION ACTIVITY


  
Number of Warrants  
Weighted Average Exercise Price  
Weighted Average Remaining Years 

Outstanding at March 1, 2022 
 —  
$—  
 — 

Issued 
 100,000,000  
$0.02  
 4.75 

Exercised 
 —  
 —  
 — 

Forfeited, extinguished and cancelled 
 (4,275,000) 
$0.02  
 (4.75)

Outstanding at February 28, 2023 
 95,725,000  
$0.02  
 4.75 

 


  
Number of Warrants  
Weighted Average Exercise Price  
Weighted Average Remaining Years 

Outstanding at March 1, 2023 
 95,725,000  
$0.02  
 4.75 

Issued 
 114,217,035  
$0.02  
 4.75 

Exercised 
 —  
 —  
 — 

Forfeited, extinguished and cancelled 
 (21,275,000) 
$0.02  
 (4.00)

Outstanding at February 29, 2024 
 188,667,035  
$0.02  
 4.10 


 
13.
COMMITMENTS AND CONTINGENCIES
 
Litigation
 
Occasionally,
the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision
for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated.
If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed
consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series
of complex judgments about future events and can rely heavily on estimates and assumptions.
 
The
related legal costs are expensed as incurred.
 
Operating
Lease
 
On
March 10, 2021, the Company entered into a 10 year lease agreement for q manufacturing facility at 10800 Galaxie Avenue, Ferndale, Michigan,
48220, commencing on May 1, 2021 through to April 30, 2031 with a minimum base rent of $15,880 per month. The base rent increase by 3%
per annum commencing May 1, 2024. The Company paid a security deposit of $15,880.
 
On
September 30, 2021, the Company entered into a 3-year lease agreement for a vehicle commencing September 30, 2021 through to September
30, 2024 with a minimum base rent of $1,538 per month. The Company paid a down payment of $18,462.
 
On
January 28, 2022, the Company entered into a 2-year lease agreement for office space at 1516 E Edinger, Santa Ana, California, 92705,
commencing on February 1, 2022 through to January 31, 2024 with a minimum base rent of $1,500 per month. The Company paid a security
deposit of $1,500. This lease expired on January 31, 2024 and was not renewed.
 
On
February 5, 2024, the Company entered into a 3-year lease agreement for a vehicle commencing February 5, 2024 through to February 5,
2027 with a minimum base rent of $1,223 per month. The Company paid a down payment of $9,357.
 
The
Company’s leases are accounted for as operating leases. Rent expense and operating lease cost are recorded over the lease terms
on a straight-line basis. Rent expense and operating lease cost was $260,406 and $260,271 for the years ended February 29, 2024 and February
28, 2023, respectively.
 

F-30
Table of Contents 


 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
SCHEDULE
OF MATURITY OF OPERATING LEASE LIABILITIES


Maturity of Lease Liabilities 
Operating Leases 

February 28, 2025 
$237,653 

2025 
$237,653 

February 28, 2026 
 225,348 

2026 
 225,348 

February 28, 2027 
 223,866 

2027 
 223,866 

February 29, 2028 
 207,558 

2028 
 207,558 

February 28, 2029 
 207,558 

2029 
 207,558 

February 28, 2030 and after 
 449,709 

2030 and after 
 449,709 

Total lease payments 
 1,551,692 

Less: Interest 
 (424,679)

Present value of lease liabilities 
$1,127,013 

 
14.
EARNINGS (LOSS) PER SHARE
 
The
net income (loss) per common share amounts were determined as follows:
 
SCHEDULE OF NET INCOME (LOSS) PER COMMON SHARE


  
    
   

  
For the Year Ended 

  
February 29,  
February 28, 

  
2024  
2023 

Numerator: 
   
  

Net income (loss) available to common shareholders 
$(20,708,716) 
$(18,109,457)

  
    
   

Effect of common stock equivalents 
    
   

Add: interest expense on convertible debt 
 —  
 47,075 

Add (less) loss (gain) on change of derivative liabilities 
 —  
 (3,595)

Net income (loss) adjusted for common stock equivalents 
 (20,708,716) 
 (18,065,977)

  
    
   

Denominator: 
    
   

Weighted average shares - basic 
 7,080,914,317  
 5,091,857,082 

  
    
   

Net income (loss) per share – basic 
$(0.00) 
$(0.00)

  
    
   

Denominator: 
    
   

Weighted average shares – diluted 
 7,080,914,317  
 5,091,857,082 

  
    
   

Net income (loss) per share – diluted 
$(0.00) 
$(0.00)

 
The
anti-dilutive shares of common stock equivalents for the years ended February 29, 2024 and February 28, 2023 were as follows:
 
SCHEDULE OF ANTI-DILUTIVE SHARES OF COMMON
STOCK EQUIVALENTS


  
    
   

  
For the Year Ended 

  
February 29,  
February 28, 

  
2024  
2023 

Convertible
    Class F Preferred Shares* 
 31,873,690,805  
 — 

Stock options and warrants 
 489,262,696  
 496,942,251 

Total 
 32,362,953,501  
 496,942,251 

 


*
On
    August 23, 2021, the Company filed amended Series F preferred shares such that Series F preferred shares are not convertible into
    common stock by a holder until (A) August 23, 2023 or (B) the date on which such a conversion may be required for the purpose of
    (i) uplisting the Company to a new stock exchange, or (ii) selling more than 50% of the Company’s assets. Had these Series
    F preferred shares been convertible at February 29, 2024 and February 28, 2023 the dilutive effects would be as follows:

 


  
For the Year Ended 

  
February 29 and February 28 

  
2024  
2023 

Convertible Series F Preferred Shares 
 —  
 20,178,158,517 

Anti-dilutive shares of common stock  
 —  
 20,178,158,517 

 

F-31
Table of Contents 

 

ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
15.
INCOME TAXES
 
The
Company has adopted ASC 740-10, “Income Taxes”, which requires the use of the liability method in the computation
of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation
allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
 
The
income tax expense (benefit) consisted of the following for the fiscal years ended February 29, 2024 and February 28, 2023:
 
SCHEDULE OF INCOME TAX EXPENSES (BENEFIT)


  
February 29, 2024  
February 28, 2023 

Total current 
$     —  
$     — 

Total deferred 
 —  
 — 

Total 
$—  
$— 

 
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
 
The
following is a reconciliation of the expected statutory federal income tax provision to the actual income tax benefit for the fiscal
years ended February 29, 2024 and February 28, 2023:
SCHEDULE OF EXPECTED STATUTORY FEDERAL INCOME TAX PROVISION 


  
February 29, 2024 

Federal statutory rate 
$(4,349,000)

State income tax benefit, net of federal benefit 
 (994,000)

Non deductible interest 
 501,000 

Non deductible stock based compensation 
 377,000 

Change in valuation allowance 
 4,465,000 

Total 
$— 


 


  
February 28, 2023 

Federal statutory rate 
$(3,803,000)

State income tax benefit, net of federal benefit 
 (859,400)

Non deductible interest 
 415,800 

Non deductible stock based compensation 
 155,400 

Change in valuation allowance 
 4,091,200 

Total 
$— 

 
For
the years ended February 29, 2024 and February 28, 2023, the expected tax benefit, temporary timing differences and long-term timing
differences are calculated at the 21% statutory rate.
 

F-32
Table of Contents 


 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
Significant
components of the Company’s deferred tax assets and liabilities were as follows for the fiscal years February 29, 2024 and February
28, 2023:
 
SCHEDULE OF COMPONENTS OF DEFERRED TAX
ASSETS AND LIABILITIES


  
February 29, 2024  
February 28, 2023 

Deferred tax assets: 
    
   

Net operating loss carryforwards 
$17,116,115  
$12,651,115 

  
    
   

Deferred tax liabilities: 
    
   

Depreciation 
 —  
 — 

Deferred revenue 
 —  
 — 

Total deferred tax liabilities 
 —  
 — 

  
    
   

Net deferred tax assets: 
    
   

Less valuation allowance 
 (17,116,115) 
 (12,651,115)

Net deferred tax assets (liabilities) 
$—  
$— 

 
The
Company has incurred losses since inception, therefore, the Company has no federal tax liability. Additionally there are limitations
imposed by certain transactions which are deemed to be ownership changes which occurred in the Company on August 28, 2017. The net deferred
tax asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carryforward was approximately
$61,973,800 at February 29, 2024 and $44,448,800 at February 28, 2023, that is available for carryforward for federal income tax purposes
and begin to expire in 2030.
 
Although
the Company has tax loss carry-forwards, there is uncertainty as to utilization prior to their expiration. Accordingly, the future income
tax asset amounts have been fully reserved by a valuation allowance.
 
The
Company has maintained a full valuation allowance against its deferred tax assets at February 29, 2024 and February 28, 2023. A valuation
allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not
be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided.
 
The
Company does not have any uncertain tax positions at February 29, 2024 and February 28, 2023 that would affect its effective tax rate.
The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because
the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax
authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and
penalties as part of income tax expense.
 
The
Company’s tax returns for the years ended February 28, 2023, and February 28, 2022, and February 29, 2021 are open for examination
under Federal statute of limitations.
 

F-33
Table of Contents 


 
ARTIFICIAL
INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 
16.
SUBSEQUENT EVENTS
 
Subsequent
to February 29, 2024 through to May 9, 2024,
 
—
the Company issued 705,166,425 common shares pursuant to a share purchase agreement for gross proceeds of $1,298,639, issuance costs
of $55,021 and cash proceeds of $1,243,618.
 
—
on March 12 ,2024 the shareholders approved an increase to its authorized common stock by 2,500,000,000 shares for 10,000,000 shares
to 12,500,000 shares.
 
—
On March 8, 2024, the Company entered into an agreement where the lender will buy pay the Company $350,000 in exchange for thirteen future
monthly payments of $36,750 commencing on August 8,2024 through to August 8,2025 totaling $477,750. The effective interest rate is 35%
per annum. This agreement is secured by a general security charging all of RAD’s present and after-acquired property. Default rate
of 15% per annum calculated daily on any missed monthly payment.
 
—
On April 29, 2024 , the Company entered into a Securities Purchase Agreement for 300 Series B Convertible , Redeemable Preferred Shares.
The Company will receive $300,000 less $10,000 in legal fees. In addition as a commitment fee the Company issued an additional 20 Series
B Convertible, Redeemable Preferred Shares. The shares have a redemption value of $1,200 per share. The Company must redeem one third
of these shares or 106 2/3 for $108,000 in 30, days and each 30 days thereafter until all the shares are redeemed at 90 days. The Company
must pay an 8% dividend from issue date to redemption date.
 
17. OTHER SUBSEQUENT EVENTS
 
Subsequent to May 9, 2024 through to May 23, 2024,
 
 — On May 15, 2024 the Company increased authorized common shares from 12,500,000,000 to 15,000,000,000.
 
— the Company issued
375,000,000 common shares pursuant to a share purchase agreement for gross proceeds of $1,500,000, issuance costs of $61,025 and cash
proceeds of $1,438,975.
 


F-34

 
